ACT Preparation / Unit 12 ACT 1107 short lesson, about 20 seconds
Compound Interest
Captions available
The idea
Compound interest grows a principal P at annual rate r, compounded n times a year for t years: A = P(1 + r/n)^(nt).
In practice
$1,000 at 6% compounded monthly for 2 years: A = 1,000(1.005)²⁴, about $1,127.16.
Where people slip
The rate per period is r/n, and the number of periods is nt.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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