Deriving the Annual Compound Interest Formula

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  • Опубликовано: 19 окт 2024

Комментарии • 69

  • @patrickjmt
    @patrickjmt  12 лет назад +11

    the derivation looks like a wonderful proof to me

    • @CheyenneAnastacia
      @CheyenneAnastacia 3 года назад

      THANK YOU SIR!

    • @vedants.vispute77
      @vedants.vispute77 3 года назад

      It seems that people earlier won't like others comments much as they use it today..

    • @siten1
      @siten1 3 года назад

      This is beautiful! lol

  • @patrickjmt
    @patrickjmt  13 лет назад

    @chocopie645 if you multiply a number by 1, it does not change. if you multiply it by 1.06, it gets larger by .06 or 6%

  • @akfoo2487
    @akfoo2487 8 лет назад

    Tnx man... im an igcse student and what you have done helped me by a landslide....

  • @aayushikumar9357
    @aayushikumar9357 10 лет назад

    A nice review on compound interest and how the formula is made.

  • @Pineapplex1990x
    @Pineapplex1990x 11 лет назад +1

    I actually hate math but i'm kind of getting better at it thanks to your vids!!!! I'm actually doing much better in class.. ty for ur help

  • @kylecoolio12
    @kylecoolio12 15 лет назад

    ok, I am currently studying finance and just want to make sure i have grasped the most important concepts, but as for questions, thats all for now, thankyou

  • @tomchalmer3634
    @tomchalmer3634 11 лет назад

    I believe you are right. Although the pattern is obvious, if you wanted to be rigorous, you would have to use induction y

  • @Xanthium
    @Xanthium 12 лет назад

    Thank You so much for the help i have had a late math assignment you were the only one who could help me understand thank you.

  • @patrickjmt
    @patrickjmt  15 лет назад

    not yet, probably soon though

  • @DanT-iu6oc
    @DanT-iu6oc 6 лет назад

    patrick, you are eons better than the entirety of James Stewart's math books. That man built a mansion off of confused math students. great video.

  • @Alternamaton
    @Alternamaton 14 лет назад

    6% is .06, but 1.06 should be thought of as (1+ .06), because we take (1 + .06) and multiply it by our current principal balance to find our new balance after one compounding period. We have our original principal plus 6% of our original principal, and if you apply the distributive property of multiplication to P(1 + .06) you'll see that it's just a compact way of expressing that.

  • @kadabiaiya
    @kadabiaiya 14 лет назад

    thank you - this helps me a great deal with my distance learining program. cheers

  • @amrutvani2
    @amrutvani2 11 лет назад

    Why to multiply principal by 1+ apr. Where this 1 comes from ?

  • @kylecoolio12
    @kylecoolio12 15 лет назад +1

    thank you for your input, if you have any knowledge of annuities, do you know if that is embedded in accounting as well or where would you apply annuities in occupations associated with finance, thankyou

  • @ian559fresno
    @ian559fresno 13 лет назад

    @patrickJMT Dear Patrick, can you please make a video on Newton's law of cooling? I searched it on youtube and it was a suggestion with your name next to it but I guess there was no video. (Search Newtons law of cooling p...and patrickjmt pops up next to it)? Thanks

  • @TopTrendingHungary
    @TopTrendingHungary 14 лет назад

    @afreakenracoon c1=c0*(1-k)^^n
    c1: the value of the car after n years
    c0: the value of the new car
    k: interest rate (0.15 cause you have 15%)
    n: amount of years
    RU learning for a high school final exam? .)

  • @jezzuz01
    @jezzuz01 10 лет назад +1

    So lets say the goal accumulated amount is $150,000, but in addition to the yearly compounded interest, you are also making one time a year $1000 deposits. How would that modify the rate?

    • @patrickjmt
      @patrickjmt  10 лет назад +1

      you mean, what happens if you are making yearly deposits (which is how most people save) ? i can make a video on that

    • @jezzuz01
      @jezzuz01 10 лет назад

      patrickJMT I appreciate that. The problem I had was Goal accumulated to be 10,000. Initial deposit was 500 with 500 being deposited at the end of each year with 5% compounded annually. I came up with A=(500+500t)(1.05)^t with t being the # of years. I've betting it's wrong though.

  • @dineshtakyar
    @dineshtakyar 14 лет назад

    Very neatly explained. Thanks.

  • @andr101
    @andr101 5 лет назад

    finally I understand the formula, thanks a lot!

  • @chocopie645
    @chocopie645 13 лет назад

    thanks for the help! wayy better than my math teacher blabbing on and on D:
    but i'm still wondering, why is the 1+ there in the 1+ .06 ?
    (sorry if that sounds stupid, but pleease reply!)
    thanks :)
    @patrickJMT

  • @YohamaMr
    @YohamaMr 11 лет назад +1

    { (P x i) + P = Pi + P }
    (Principle x interest) is due after the 1st year
    Principle is returned after the 1st year
    Factoring leads to P(1 + i )
    in the lesson YOU DO NOT EXPLAIN WHERE YOU AND WHY YOU SAY one (1)
    curious student will want to know where you get the ONE.
    Thank you for the lesson
    Joseph

  • @kylecoolio12
    @kylecoolio12 15 лет назад

    hello, out of interest, is this accounting? or university math?, thankyou

  • @miyhav8580
    @miyhav8580 10 лет назад +1

    This helped me so much!!

  • @simpsons1432
    @simpsons1432 8 лет назад

    Your vids are very helpful :) keep it up!

  • @samerodeh6757
    @samerodeh6757 9 лет назад

    You save lives man!!!!

  • @patrickjmt
    @patrickjmt  15 лет назад

    that is for CONTINUOUS compounding, not annual

    • @koobzworks
      @koobzworks Год назад

      Continuous compounding formula is A = Pe^(rt)

  • @Quichey2
    @Quichey2 15 лет назад

    What is this?
    Pe^rt
    Principal times e to the rate times time power

  • @arraso7
    @arraso7 15 лет назад

    Do u have video on quater yearly compound, half yearly compound video?

  • @patrickjmt
    @patrickjmt  14 лет назад +1

    @MetalBassjunkie420 i do not have any videos about annuities although i may make some soon!

  • @arraso7
    @arraso7 15 лет назад

    I learn it in grade 9 or 10, not sure if it is considered accounting.

  • @afreakenracoon
    @afreakenracoon 14 лет назад

    HELP!!!
    a car was bought for 25000$, each year it depreciates by 15%...
    a) write an exponential formula that demostrates the cars value in (n) amount of years after it was purchased/
    b) what is the cars value at the end of 3 years
    c) after how many years will the value of the car be half of the original price?
    PLZ HELP!!!! THANK YOU!!!

  • @EforEvery1
    @EforEvery1 7 лет назад

    Thank you.

  • @ronenfe
    @ronenfe 12 лет назад

    how do you prove this formula? by induction?

  • @roozterchick
    @roozterchick 15 лет назад

    I was hoping for that too.. But I found a formula.. I trying to work on it right now :p Hope it helps :p
    Quarterly = P (1 + r/4)4 = (quarterly compounding)

  • @VVeZoX
    @VVeZoX 11 лет назад

    He does say where the one comes from. Watch an earlier video in this playlist and you will see. Think before you post...

  • @barimahprince7179
    @barimahprince7179 11 лет назад

    thank you.

  • @krimsonre27
    @krimsonre27 7 лет назад

    why, what, how does that "1 +" come from.... why why why is it there

  • @Xoxojaro0805xoxo
    @Xoxojaro0805xoxo 11 лет назад

    I am really struggling with this please help!! Finals are around the corner and have no clue what it is im doing wrong its driving me NUTS

  • @CertifiedSparkz
    @CertifiedSparkz 11 лет назад

    i came across a question asking for the years, and couldnt really re=arrange the forumula to work out (Y) in this case.

  • @hilo2hell
    @hilo2hell 11 лет назад

    how do i do quarterly?? and daily??

  • @mrsomera2293
    @mrsomera2293 7 лет назад

    Is my answer true?

  • @afreakenracoon
    @afreakenracoon 14 лет назад

    @macskap thanks alot this question was really messing with me :P and ya it was for my grade 11 math exam

  • @worthwords420
    @worthwords420 11 лет назад

    Ezekiel 18:17
    Withholds his hand from iniquity, takes no interest or profit, obeys my rules, and walks in my statutes; he shall not die for his father's iniquity; he shall surely live.

  • @dsgfhgjkjhnbmnhkglgj
    @dsgfhgjkjhnbmnhkglgj 12 лет назад

    THNQ...................................

  • @hankOSFP1234
    @hankOSFP1234 13 лет назад

    it is einstein
    wake up mr jordan

  • @osiris3yhn
    @osiris3yhn 11 лет назад

    yo man take my test tomorrow

    • @jayabrams400
      @jayabrams400 4 года назад

      did you fail? you probably failed.

  • @sajidullah
    @sajidullah 11 лет назад

    You skipped the step from which you got the (1+0.06) factor..You are teaching remember

  • @NarikoHimawari
    @NarikoHimawari 13 лет назад

    thanks!!!!!!!!!!!!!!!!

  • @alana.1729
    @alana.1729 10 лет назад

    Can someone give me the link to the next video where he explains the APR part?

  • @avanahmarigelle
    @avanahmarigelle 4 года назад

    GRADE 11 HERE HINDI KO PA RIN MAINTINDIHAN ANG LESSON AAAAAAAAAAAAAHHHHHH

  • @Z3NTR0music
    @Z3NTR0music 9 лет назад

    haha its kinda annoying that your left handed since we cant see what your writing. thanks for the video though :)

  • @adarshagarwal2
    @adarshagarwal2 7 лет назад

    Your math is correct (obviously) but you can't explain properly. Sorry

    • @SuperKoreanzombie
      @SuperKoreanzombie 7 лет назад

      adarshagarwal2
      Sorry, do u know why it's (1+Apr), why do u have to add the 1? Thanks

    • @adarshagarwal2
      @adarshagarwal2 7 лет назад

      hahaha, dude i am indian. #NuffSaid

    • @alfonshomac
      @alfonshomac 7 лет назад +1

      +Johnny g he's factoring out the principal:
      total amount = principal + principal * APR
      = principal * (1 + APR)

    • @TheDeluxe4O
      @TheDeluxe4O 6 лет назад

      @@alfonshomac thank you so much this all makes sense now. I was wondering where the hell that 1 came from. When you said he factored it, I immediately went to my white board and started factoring and it all makes sense now. Why didn't he show it in the video though. He completely skipped the step of showing us that he factored it and just introduced the 1 out of no where. No wonder so many people don't understand the formula