Question

In the compound interest formula, what does the balance, ___, represent in an account with a principal of ___, an annual interest rate of ___, in decimal form, subject to compound interest paid ___ times per year?

Answer 1

The balance in the compound interest formula represents the total amount of money in the account after a certain period of time. It includes both the initial principal and the accumulated interest.

Step-by-step explanation:

The balance in the compound interest formula represents the total amount of money in the account after a certain period of time. It includes both the initial principal and the accumulated interest. Here is how the formula works:

1. Start with the principal amount.
2. Multiply the principal by 1 plus the annual interest rate in decimal form.
3. Raise the result to the power of the number of times the interest is compounded per year.
4. Finally, subtract the initial principal from the final value to get the balance.