Basics of Interest Rates

This is a note on the basics of interest rates. There are two ideas to keep in mind, the rate and how often interest is compounded. The rate is usually given as an annual figure, e.g. 7.5% annual annual percentage rate. However, that interest can be compounded, annually, quarterly, monthly, weekly, daily, even continuously! Let r the the annual interest rate and let B be the balance in your bank account:

Christopher W Brown
Last modified: Mon Sep 13 16:57:16 EDT 2004