Skip to main content
Logo image

Just Enough Algebra

Section B.4 Formulas from finance

Compound Interest Formula

a=p(1+r12)12y
  • a = account balance ($)
  • y = time invested (years)
  • p = initial deposit or “principal”
  • r = interest rate compounded monthly (as a decimal)

Equivalent APR Formula

APR=(1+r12)121
where r = interest rate compounded monthly (as a decimal)

Future Value Annuity Formula

a=p(1+r12)12y1r12
  • a = account balance ($)
  • y = time invested (years)
  • p = regular (monthly) deposits ($)
  • r = interest rate compounded monthly (as a decimal)

Loan Payment Formula

p=ar121(1+r12)12y
  • a = loan amount ($)
  • y = time invested (years)
  • p = regular (monthly) payment ($)
  • r = interest rate compounded monthly (as a decimal)