Example Solving Compound Interest Word Problems : Find Compound Amount given Interest rate, Time Period and Compounding.

Let A = Final Amount
Let P = Principle
Let r = Rate
Let t = Time
Let n = Interest periods per year
 
Given: P = $9100
Given: r = 8%

Given: n = 4
Given: T = 4 YEARS 
 
                 nt
A = P(1+r/n)  
                  4*4
A = 9100(1+0.08/4)   
 
                 16 
A = 9,100(1+0.02) 
 
A = 9100 * 1.37279
 
A = $12,492.35

Solving Compound Interest Word Problems:

	Compound Interest Formulas

				nt
	A = P(1+r/n)  	Compound Interest Formula for periodic compound interest

	A, in dollars, is the final Amount when P dollars, the Principle, are invested 
	at the interest rate r for t years. n is the compound interest period.
	

• If interest is compounded annually, n is 1.
• If interest is compounded semi-annually, n is 2.
• If interest is compounded quarterly, n is 4.
• If interest is compounded monthly, n is 12.
• If interest is compounded weekly, n is 52.
• If interest is compounded daily, n is 365.

For interest compounded continuously, a different formula applies.

A=Pe^rt Interest Formula when Compounded Continuously.

e, Euler's Constant, is the base of the natural logarithm = 2.71828…

A common type of compound interest word problem is to find out how long it will take for an amount to double when invested at a fixed rate of interest. In this case, P, the Principle, can be assumed to be $1, and A = 2.

In this case, the 2 compound interest rate formulas become:

2 = (1+r/n)^nt Compound Interest Formula for periodic compound interest when the principle is to double.

2=e^rt Continuously Compounded Interest Formula when the principle is to double.

Examples of Compound Interest Word Problems solved by the Algebra Word Problem Solver:
* Find the compound amount for $57,809.34 at 12% compounded quarterly for 5 years.

* Find the present value of $1347.89 in 3.5 years, 6.77% compounded semiannually.

* Find the future value of $42,000 in 7 years, 12% compounded monthly.

* Find the interest on $12,699.36 at 10% compounded quarterly for 7 quarters.

* At what nominal rate converted each 30 days will $600 amount to $900 in 8 years?

* A total of $15,000 is invested at an annual percentage rate of 8%. Find the balance after 6 years if the interest is compounded continuously.

>>> Please see below for a sample word problem * solved by the Algebra Word Problem Solver * with solution.