Exponentials

Compound Interest is a form of an exponential equation used in finance. In the compound interest formula, a is the initial value invested or borrowed, b is the interest rate, and x is the number of years the loan is compounded. For this application, the general form becomes A = P(1+r)^t :

• A is the total amount
• P is the principle (initial) amount invested or borrowed
• r is the annual interest rate in decimal form
• t is the time in years