# Compounded Interest (Future Value)

Compound interest is when interest is immediately re-invested.
This is an example of a Geometric Sequence where a series of numbers are multipled by a fixed amount.

### Annual Compounding

If you invested £50 today how much would you have after 3 years if the interest rate is 6% with annual compounding?  If you invested £50 today how much would you have after 185 days if the interest rate is 6% with annual compounding?  ### Semi-Annual Compounding

If you invested £50 today how much would you have after 3 years if the interest rate is 6% with semi-annual compounding?
Semi-annual compounding means that the interest is calculated and re-invested every 6 months.  ### Quarterly Compounding

If you invested £50 today how much would you have after 3 years if the interest rate is 6% with quarterly compounding?  ### Monthly Compounding

If you invested £50 today how much would you have after 3 years if the interest rate is 6% with monthly compounding?  ### Daily Compounding

If you invested £50 today how much would you have after 3 years if the interest rate is 6% with daily compounding?  ### Important

The higher the interest rate the larger the future value
The shorter the compounding period, the larger the future value.
It is common to compute the future value of \$1, then multiply it by the original amount.