P = C (1 + r/n) nt where P = future value C = initial deposit r = interest rate (expressed as a fraction: eg. 0.06) n = # of times per year interest is compounded t = number of years invested
When interest is only compounded once per year (n=1), the equation simplifies to: P = C (1 + r) t
When interest is compounded continually (i.e. n --> ), the compound interest equation takes the form: P = C e rt
Sum (or difference) of 2 real numbers equals a real number
a + 0 = a
a + (-a) = 0
(a + b) + c = a + (b + c)
a + b = b + a
a - b = a + (-b)