Question

question 4 (10 points)
match the compound interest formula (future value) variable with the definition.
number of times the
interest is compounded
each year

1. a

principal or initial amount
borrowed or invested

1. p

annual interest rate

1. r

1. n

future value

1. t

length of time in years for
the loan or investment

Explanation:

• The compound interest formula for future value is $A = P(1 + \frac{r}{n})^{nt}$.
• In this formula:
• $n$ represents the number of times interest is compounded per year.
• $P$ is the principal (initial amount borrowed or invested).
• $r$ is the annual interest rate (in decimal form).
• $A$ is the future value (the amount after $t$ years).
• $t$ is the time in years.

Answer:

• Number of times the interest is compounded each year: 4. $n$
• Principal or initial amount borrowed or invested: 2. $P$
• Annual interest rate: 3. $r$
• Future value: 1. $A$
• Length of time in years for the loan or investment: 5. $t$