Question

Define the variables in the compound interest forμla for interest paid more than once a year.

a) P - Principal, r - Rate, t - Time
b) P - Principal, n - Number of × interest is compounded, r - Rate, t - Time
c) P - Principal, r - Rate, n - Number of × interest is compounded, t - Time
d) P - Principal, t - Time, r - Rate

Answer 1

The correct variables for the compound interest formula are P for Principal, r for Rate, n for the Number of times interest is compounded per year, and t for Time. The compound interest is found by finding the difference between the future value and the principal.

Step-by-step explanation:

The variables in the compound interest formula when the interest is paid more than once a year are:

So, the correct answer is c) P - Principal, r - Rate, n - Number of times interest is compounded, t - Time.

To calculate the compound interest, you need to find the difference between the future value and the present value of the principal. The formula for the future value (FV) is:

FV = P x (1 + r/n)nt

Compound interest is then found by subtracting the principal (P) from the future value (FV):

Compound Interest = FV - P