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In this video, we're going to be dealing with the concept of compound interest.
00:05
And for those of you that need a quick refresher, just know that compound interest is the addition of interest to the principal sum of money in an account.
00:14
And we calculate it using the formula a is equal to p times 1 plus r over m to the power of m times t.
00:28
Just know that a is the accumulated interest at the end of t years.
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P is our principal sum of money, r is our nominal interest rate per year, m is the number of conversion periods per year, and t is the term or the number of years.
00:45
In this question, we are given that our p is $12 ,000, rr is 5%, or 0 .05, rt is 10, and rm is 4, as when they say compounding quarterly, they mean that it's compounded 4 times a year, giving us an value of 4.
01:04
So what we're asked to do here is to find a, our accumulated amount, given the info that we've received.
01:11
So what we're going to do here is that we're just going to look back at our compound interest equation, and we're going to fill in our knowns.
01:18
So we don't know our a, so it stays at a...