<p>i've yet to take a finance class, but how would i calculate this? Assuming there's an easier way to do it with a financial calcultor.</p>
<p>Principle-$10,000
Interest- 10%/year
Annual Investment #1- $4000
Annual Investment #2- ($4000 X 1.10)=$4400
Annual Investment #3- (4400 X1.10)=$4840</p>
<p>So basically each year, I invest 10% more in my annual investment. After 30 years,, what would the Interest and total be?</p>
<p>Also could you show me how you did the calculator?</p>
<p>rofl i learned about compound interest in my second year of high school. Pity i forgot it now rofl</p>
<p>For continuous compounding:</p>
<p>FV= PV * (1 + r)^t</p>
<p>FV is Future Value (what you are looking for)
PV is Present Value (aka the value today)
r is the annual interest rate
t is the time in years</p>
<p>Oh and what kind of calculator do you have?</p>
<p>This can be done very quickly in Excel. </p>
<p>Set the first Cell, A1 to the value: 10000
Set the second Cell, A2 to the value: =(A1+4000)*1.1
Select A2, and mouse over the lower right corner until your pointer changes.
Click and hold, and drag down to Cell A30 for a final total.</p>
<p>Doing this, I get a total of $812,607 after 30 years. Principal was $126,000, so that is $686,607 interest. The power of compounding...</p>
<p>Oops, looking back, I think I misread what you were asking. The above would be the total if you simply added 4,000 each year with a 10% interest rate. It appears you're also asking what it would be if you added 10% to your annual contribution of $4,000 each year though.</p>
<p>In this case I get $1,998,749 after 30 years with $604,523 being from principal and contributions. That's $1,394,226 in interest.</p>
<p>i just took finite math last semester and i already forgot it lol</p>
<p>C-Revs' formula is very limited, and it is not continuously compounding interest. It's yearly compounding.</p>
<p>There are two general interest formulas:</p>
<p>I = P(1 + R/N)^(NT)</p>
<p>I is the same as C-Revs' "Future Value"
P = Principal value
R = Interest rate in decimal form
N = Number of compounds per year (12 for compounding monthly, for example)
T = Number of years</p>
<p>I = Pe^(RT)</p>
<p>This is the continuously compounding interest formula. You can't get a higher value with the same rate than with this formula.</p>
<p>e = Euler's number
All other definitions are the same</p>
<p>Ooops my bad meant to say yearly compounding. Figured he'd want to know that formula since it is most used in Finance. Absolutely right though, for continuous compounding FV= Pe^(rt)</p>
<p>Also to calculate in excel</p>
<p>=FV(rate, number of periods, payment (if annuity), - present value, type of annuity (0 for ordinary, 1 for annuity due))</p>