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FM Compound Interest Graph

2.2 Analysis of Compound Interest

Compound Interest with Regular Additions or Withdrawals

Note: if you cannot remember the basic recursive formula for a compound interest system, revise notes for 2.1 Simple and Compound Interest.

  • A compound interest system with regular additions or withdrawals has both a percentage increase/decrease and a fixed amount increase/decrease at each compounding period.
  • This type of system can be modelled using the following recursive formula:
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