# compound interest

#### yorkmanz

##### New member
hello

please i need help understanding both questions

use the compound interest formula a= p(1+i)^n to answer the following questions:

1 what type of equation is present if n is constant equal to 1, rather than a variable?

2 what type of equation is present if i, A, or P are constant rather than variable?

thanks

#### Jomo

##### Elite Member
Hi, you really need to tell us what you re looking for? When you say what type of equation it is not very clear. What are the choices-based on what you learned in class or in your textbook?

What have you tried?! Where are you stuck?

#### Otis

##### Senior Member
... use the compound interest formula a= p(1+i)^n to answer ...

1) what type of equation is present if n is constant equal to 1 ...

2) what type of equation is present if i, A, or P are constant ...
Hello yorkmanz. When I read "what type of equation", I think about definitions. Did the class provide definitions, for different types of equations? For instance, I've seen various definitions for "literal equations".

I'm not sure what the two questions above are trying to discuss because there seems to be more than one way to interpret them. Please check the textbook, handouts or class notes for any definitions having to do with equation types.

If I interpret the questions as having more to do with understanding the meaning of individual symbols or the difference between simple interest and compound interest, then I could answer in those contexts.

For example, if we replace symbol n with the number 1, then we get a formula for simple interest because the calculation is for one interest period only (eg: one month, one quarter, one year). That is, the principal earns interest for one period, and nothing else happens. If n were greater than 1, then the interest added from the first period would itself begin earning interest in subsequent period(s), and that's what we call compound interest (interest earning interest).

If we replace symbol i with a constant, then we get a formula for compound interest at a fixed rate. If we replace symbol p with a fixed dollar amount, then we get a formula for compound interest with a fixed investment.

Without more context, I'm not sure what else to say about this exercise, but I'll post again if I think of anything else.

A quick note about notation: symbols p and P are not the same. Neither are A and a. In math, it's best to not interchange upper- and lower-case letters, when representing the same quantity. Pick one symbol or the other (or use the one you've been provided), and then be consistent. Cheers

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