Page 334 - F2 - MA Integrated Workbook STUDENT 2018-19
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Chapter 14
2.2 Compound interest
A sum invested today will earn interest. Compounding calculates the future value of a
given sum invested today for a number of years.
Present value Future value
Formula for compounding:
n
V = X(1+r) V = Future value
X = Initial investment (present value)
r = Interest rate
n = number of time periods
Test your understanding 1
How much would $2,000 invested at 6% be worth at the end of 4 years?
Illustrations and further practice
Now try TYU questions 2 and 3 from Chapter 14
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