Compound interest formula..?! (1 Viewer)

[Prawnchip]

quick question:

how do we know when to use just the compound interest formula vs. when to use like A1 = ___, A2 = ____ etc therefore total = A1 + A2 + A3... etc (essentially you use the sum of the GP)

 

[bongoli]

I suppose you're talking about the difference between compound interest and superannuation questions?

It's all about the question:
Compound Interest: Use the formula when the question specifies that there is an amount being deposited ONCE only initially and is being compounded by an % rate.

Superannuation:: The question will generally give it away, but if it involves the use of installments (person is depositing every time period), then you would use the A1+A2.... formula.

 

[Prawnchip]

I suppose you're talking about the difference between compound interest and superannuation questions?

It's all about the question:
Compound Interest: Use the formula when the question specifies that there is an amount being deposited ONCE only initially and is being compounded by an % rate.

Superannuation:: The question will generally give it away, but if it involves the use of installments (person is depositing every time period), then you would use the A1+A2.... formula.

Ahhh I see. Thanks for clarifying x