Compound Interest (HSC SSCE Mathematics Standard): Flashcards

Interest on principal AND on previously earned interest

$FV = PV(1 + r)^n$

Future value (final amount)

Present value (initial amount)

Interest rate per compounding period (as decimal)

Number of compounding periods

$I = FV - PV$

Divide annual rate by 12, multiply years by 12

$PV = \frac{FV}{(1 + r)^n}$

Exponential curve that gets steeper