n most (always) of the time represents a number of times.
Total amount = a(1+r)^n
a = original amount
r = rate (percentage as a decimal)
n = number of times interest applied.
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Ex: Janae takes out a $4500 loan for a car at 3% interest.
After 1 year: 4500(1.03)
After 4 years: 4500(1.03)^4
After 12 years: 4500(1.03)^12
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Compound
When it comes to calculating interest, there are two basic choices: simple and compound.
Linear - Simple interest: a set percentage of the principal applied every year. (rarely used in practice)
Exponential - Compound interest: applied to both loans and deposit accounts. Compound interest means "interest on the interest" (nearly always used in real life)
In real life, interest is always compound. this is good when you EARN interest and bad when you PAY interest.
A = P(1+r/n)^nt
A = Balance after years.
P = principal or og amount.
r = annual rate expressed as a decimal.
n = # of times interest is compounded per year.
t = time in years
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Historia CortaThese are the paragraphs I write for school, Idc if you steal them or not it's just so I post something. ¯\_(ツ)_/¯ (And algebra notes) Stay in mind that I am in 7th grade so yeah-
