Let's experiment with this formula. Suppose that we invest $1000 at 5% interest. How much will we have in three years? By simply plugging the three values into the formula, we obtain

`1000*(1+.05)^3;` |

How about after 30 years?

`1000*(1+.05)^30;` |

How about 10% interest for 15 years?

`1000*(1+.10)^15;` |

Try the formula out for difference balances, interest rates, and
intervals. Notice that every time you use the formula, you have to
remember its exact form. Because the formula's pretty short, this
isn't too much of a pain. But a more complicated formula--or even
this one, if you try to use it tomorrow--might be difficult to
remember. It would be handy if you could calculate compound interest
by entering something like `compound(P,R,n)`. Unfortunately,
Maple has no built-in compound interest calculation function.

Hamlet Project

Department of Computer Science

University of Utah