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Compound Interest Cab913

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Compound Interest Cab913


1. The problem asks for the formula to find the maturity (future) value of compound interest. 2. The maturity value or future value $F$ in compound interest is calculated using the formula: $$F = P(1 + r)^t$$ where: - $P$ is the principal amount (initial investment), - $r$ is the interest rate per period (expressed as a decimal), - $t$ is the number of compounding periods. 3. Explanation: - Compound interest means interest is earned on both the initial principal and the accumulated interest from previous periods. - The formula $F = (1 + r)^t$ alone is incomplete because it does not include the principal $P$. - The formula $F = P + I$ is also incomplete because it assumes simple interest where $I$ is interest earned, but does not account for compounding. 4. Therefore, the correct formula to find the maturity value with compound interest is: $$F = P(1 + r)^t$$ Final answer: Use the formula $F = P(1 + r)^t$ to find the maturity (future) value of compound interest.