← Chapter 11
College Algebra · Chapter 11

Compound Interest, Four Ways

One deposit. Same rate. Same number of years. The only difference is how often the bank stops and adds the interest in — once a year, once a month, once a day, or without ever stopping. Move the sliders, then walk through where each dollar figure actually comes from.

Balance over time

Set up the account

Principal P — the deposit$1,000
Annual rate r5%
Time t in years10 yr
Two errors that ruin the answer. r goes in as a decimal — 5% is 0.05, not 5. And n counts periods per year, not in total; monthly is always n = 12 whether t is 1 year or 40. The formula needs n > 0 and 1 + r/n > 0, which is automatic for any real deposit.
Pick a compounding scheduleeach one is the same money, counted differently

Four accounts, same deposit

Where that number comes from