compound Interest half yearly and quarterly?

M

MATRIXNEO

New member
I know the equation of compound interest but I dont know how to use it for quarterly or half yearly basis.Can you come up with simple but correst formulas which could be used for this case.Please also give the names for each symbol in
the equation.
 
C

ChisaiChibi

New member
This is only through memory so correct me if I am wrong.

the formula is P = F/(1+r)^n right?
u can do it by finding the effective rate or:

P = F/(1-r/2)^(n*2) for half yearly or
P = F/(1-r/4)^(n*4)

hope that helps
 
T

Tom

Active member
P = p(1 + r)^n

P = Future Value
p = Present Value
r = rate of increase per period (percentage rate x 100)
n = number of periods

r and n must have compatible periods.

For example, if the compounding period is annual, n must be in years, and r must be the annual rate.
if the compounding period is monthly, n must be in months, and r must be the monthly rate, annual rate/12
if the compounding is quarterly, n is in quarters, and r must be the quarterly rate, annual rate/4
if the compounding is semi-annual, n is the number of half years, and r must be the semi-annual rate, annual rate/2.
 
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