Final answer:
To find the compound interest, calculate the future value using the formula Future Value = Principal x (1 + interest rate)^time, then subtract the present value. Compound interest can have a significant impact over longer periods of time and with larger sums of money.
Step-by-step explanation:
Compound interest is an interest rate calculation on the principal plus the accumulated interest. To find the compound interest, you can follow these steps:
- Calculate the future value using the formula Future Value = Principal x (1 + interest rate)^time.
- Calculate the compound interest by subtracting the present value from the future value.
For example, if the principal is $100, the interest rate is 5%, and the time is 3 years, the future value would be $115, and the compound interest would be $15.
It's important to note that compound interest can have a significant impact over longer periods of time and with larger sums of money.