Question

An investment pays 8% interest, compounded annualy.

Write an ewuatiin that expressed the amount A, of the investment as a function of time, t, in years

Answer 1

A = P(1.08)^t
where P is the initial investment or "principle"

If t is not an integer number of years, the next lower integer must be used, since interest is only compunded at the end of a year in this example. Some banks and bond transfer agents will credit partial-year interest up to the time of withdrawal, however.