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compound(number1, number2)

where number1 represents the interest rate (expressed as a decimal) and number2 represents the number of periods over which the interest is compounded.

Value returned: value of one unit of principal invested at the interest rate and compounded over the specified number of periods, or a number equal to (1 + rate) ^ periods

An interest rate involves a certain percentage (expressed as a decimal) per some unit of time—usually per year. You must use the same unit of time to measure the number of periods.

For example, if you have a yearly interest rate that is compounded monthly, you must convert the yearly rate to the interest per month (rate / 12) and be sure to express the number of periods as months (2 years = 24 months).

Demo Script

on compoundDemo
   set numberFormat to "0.00"
   answer "$100 invested for 5 years at 5.75% interest" &&¬
   "compounded quarterly yields $" & (100 * compound(.0575/4,5*4))
 end compoundDemo


Related Topics

« commandKey | HyperTalk Reference | cos »

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