Comments on: A Visual Guide to Simple, Compound and Continuous Interest Rates http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/ Learn Right, Not Rote. Fri, 10 Feb 2012 02:50:41 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: An Intuitive Guide To Exponential Functions & e | BetterExplained http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-12423 An Intuitive Guide To Exponential Functions & e | BetterExplained Mon, 14 Nov 2011 08:50:14 +0000 http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-12423 [...] Examples make everything more fun. A quick note: We’re so used to formulas like 2^x and regular, compound interest that it’s easy to get confused (myself included). Read more about simple, compound and continuous growth. [...] [...] Examples make everything more fun. A quick note: We’re so used to formulas like 2^x and regular, compound interest that it’s easy to get confused (myself included). Read more about simple, compound and continuous growth. [...]

]]> By: Kalid http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-4775 Kalid Mon, 17 Oct 2011 16:25:19 +0000 http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-4775 @ken: Hi, the formula for compound interest is P * (1 + r)^n where P is your initial amount, r is your interest rate (10% = .10), and n is the number of years. The 1 is needed because your interest rate is a percentage increase from 1.0 (i.e, 1.0 + .10 = 1.1, which is a 10% increase over 1.0). You could write P * (T)^n where T is the "total" amount after 1 year (1.1). But, it's usually easier to see the interest rate separated out in each formula. @ken: Hi, the formula for compound interest is

P * (1 + r)^n

where P is your initial amount, r is your interest rate (10% = .10), and n is the number of years. The 1 is needed because your interest rate is a percentage increase from 1.0 (i.e, 1.0 + .10 = 1.1, which is a 10% increase over 1.0).

You could write

P * (T)^n

where T is the “total” amount after 1 year (1.1). But, it’s usually easier to see the interest rate separated out in each formula.

]]> By: ken http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-4774 ken Sat, 29 Jan 2011 22:33:45 +0000 http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-4774 in the formula for compound interest in the brackets there is the number 1, could you tell me what that represents or what is it's significance thank you in the formula for compound interest in the brackets there is the number 1, could you tell me what that represents or what is it’s significance
thank you

]]> By: Kalid http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-4773 Kalid Sat, 08 Jan 2011 07:18:45 +0000 http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/#comment-4773 @Jan: Thanks for the comment! Just summarizing from email, but I think the J notation may have evolved due to the need for another letter (not i) to represent an item. In math it's very common to say the "ith" element, but since that was taken "j" may have been a fit. Not sure though! @Anonymous: Thanks! @Toban: Great feedback -- we should compound "n" times for year and do that for "t" periods of time to keep it consistent. Thanks! @Jan: Thanks for the comment! Just summarizing from email, but I think the J notation may have evolved due to the need for another letter (not i) to represent an item. In math it’s very common to say the “ith” element, but since that was taken “j” may have been a fit. Not sure though!

@Anonymous: Thanks!

@Toban: Great feedback — we should compound “n” times for year and do that for “t” periods of time to keep it consistent. Thanks!

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