The compound interest formula states that if X dollars are invested today at an interest rate i and
allowed to grow for t years, it will become X(1 + i)(t) dollars in t years.

Question

Quizplus · Accepted Answer

The correct compound interest formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. The formula provided in the question incorrectly suggests a linear growth model rather than exponential growth.

The Compound Interest Formula States That If X Dollars Are