Episode 4 — Finance Growth and Decay

Compound Interest

Learners will be able to:

• Calculate the accumulated amount using the formula A = P(1 + r)^n. • Identify the key components of the compound interest formula: principal (P), annual interest rate (r), and number of years (n). • Explain how compound interest allows for interest to be earned on both the initial investment and accrued interest. • Describe the exponential growth pattern represented by the equation A = P(1 + r)^n. • Apply the compound interest formula to calculate the future value of an investment or loan.