Annual compound interest formula
The formula for annual compound interest is A = P (1 + r/n) ^ nt:
Where:
A = the future value of the investment/loan, including
interest
P = the principal investment amount (the initial deposit or
loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed
for
Regency Bank
P = 6700. r = 9/100 = 0.09 (decimal). n = 1. t = 16.
A = 6700 (1 + 0.09 / 1) ^ 1(16) = 26,601.05
So, the investment balance after 16 years is $26,601.05.
King Bank
P = 6700. r = 9/100 = 0.09 (decimal). n = 12. t = 16.
A = 6700 (1 + 0.0075 / 12) ^ 12(16) = 28,127.12
So, the investment balance after 16 years is $28,127.12
