SOLUTION: The formula to calculate interest and update balance is {{{A= P(1+(r/n))^nt}}}. A = amount P = initial amount r = interest rate n = times per year t = amount of years Is {{

Algebra ->  Finance -> SOLUTION: The formula to calculate interest and update balance is {{{A= P(1+(r/n))^nt}}}. A = amount P = initial amount r = interest rate n = times per year t = amount of years Is {{      Log On


   

Question 950143: The formula to calculate interest and update balance is A=+P%281%2B%28r%2Fn%29%29%5Ent.
A = amount
P = initial amount
r = interest rate
n = times per year
t = amount of years
Is A-P the same as P%28r%2Fn%29%5Ent?
I need just the amount of interest calculated.

Found 3 solutions by lwsshak3, ikleyn, MathTherapy:
Answer by lwsshak3(11628) About Me  (Show Source):
You can put this solution on YOUR website!
A=+P%281%2B%28r%2Fn%29%29%5Ent.
A=+P%2BP%28r%2Fn%29%5Ent.
A-P=P%28r%2Fn%29%5Ent.
Yes, interest is always the amount at the end of the period(A) minus the initial investment(P)

Answer by ikleyn(53937) About Me  (Show Source):
You can put this solution on YOUR website!
.
The formula to calculate interest and update balance is A=+P%281%2B%28r%2Fn%29%29%5Ent.
A = amount
P = initial amount
r = interest rate
n = times per year
t = amount of years
Is A-P the same as P%28r%2Fn%29%5Ent?
I need just the amount of interest calculated.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 


In his post, @lwsshar3 answers "Yes" to your question.


This answer "Yes" is FATALLY incorrect.


The correct answer is "No".


It would be INCORRECT to use the formula  A - P = P%28r%2Fn%29%5Ent.


To find the interest, you need calculate the future value first using the standard formula

    A = P%2A%281%2Br%2Fn%29%5Ent


and then (after that) calculate the interest as A - P.

Again, the answer in the post by @lwsshar3 is incorrect.
Ignore it and be aware.



Answer by MathTherapy(10858) About Me  (Show Source):
You can put this solution on YOUR website!
The formula to calculate interest and update balance is A=+P%281%2B%28r%2Fn%29%29%5Ent.
A = amount
P = initial amount
r = interest rate
n = times per year
t = amount of years
Is A-P the same as  P%28r%2Fn%29%5Ent?
I need just the amount of interest calculated.
*********************************************
@lwsshak3(11628) is misleading you. Then again, he/she/it probably doesn't know any better. So, as stated by
@Ikleyn, IGNORE all that RUBBISH that that respondent is trying to "feed" you.  

From the compound-interest formula, it's clearly obvious that 1+%2B+n%2Fr is being RAISED to the %28nt%29%5E%28th%29 power,
so you CANNOT DISTRIBUTE P to the %281+%2B+n%2Ft%29%5E%28nt%29. In other words, A+=+P%281+%2B+%28r%2Fn%29%29%5Ent CANNOT be DISTRIBUTED,
at this point, and WRITTEN as: A+=+P+%2B+P%28r%2Fn%29%5E%28nt%29, or A - P = P%28r%2Fn%29%5E%28nt%29.

No-one can provide you with actual amounts, since you didn't provide amounts, in the first place.

In the compound-interest formula, A+=+P%281+%2B+%28r%2Fn%29%29%5Ent, there are 5 variables. To find A, you need the other 4
variables (P, r, n, anf t). Assuming you have these 4, and you've calculated A, you then need to SUBTRACT P
from your newly-calculated A. This will give you the INTEREST amount.