OK, I'm not doing this for homework or anything.. Just something I want to figure out. I have the formula for interest FV = PV(1+i) to the n power FV = future value PV = present value i = interest n = time On a present value of $1000 on 6% interest, I want to find out my interest after a year. The problem is that I need a different formula since we're trying to figure out the interest after a year if the payout is monthly. The problem is that the above formula shows only a single payout of interest after the whole period which is one year. Our work: FV = PV (1+i) to the nth power FV = 1000 (1 + 6%) to the 1st power FV = 1000 (1 + 0.06) to the 1st power FV = 1000 (1.06) to the 1st power FV = 1000 (1.06) FV = 1060 But then that's after one interest payment at the end of the accrual period. So we tried to figure it out monthly but we have two problems. I can't figure solve the problem because of the power (0.08 approx) and I don't what I do after I figure out the monthly interest to figure out the whole years earnings after monthly accrual periods. New work: FV = PV (1 + i) to the nth power in this case n would equal 1/12 which represents one month which would be approx. 0.08 and can't figure out 1 + i to the 0.08th power.... When this problem is solved I would just have the interest after one month and I need a problem that can give me accrual after one year on monthly interest payments. I think I might have to translate the yearly interest to a monthly interest rate and do the formula that way. What do you think? Thanks Melanie
I may not be correct, but here is what I think. If your money is compounded monthly, take your n to be 12 ( assuming n for a year to be one)and divide your rate of interest by 12.