how to calculate compound interest when year is not whole?

Question

The formula for compound interest is

Annual Compound Interest Formula: $$A = P\left(1+\frac{r}{n}\right)^{nt}$$

Here year is a whole number. So how can I calculate compound interest on 40,000 for 2.5 years at 10% p.a. Interest is compounded annually.

Answer 1

HINT So what are the values of $P, r, n, t$ in your formula? Comment answer or update question and I will be happy to give more hints

Answer 2

n= 1 since this is "compounded ANNUALLY". Now, what are P, r, and t for this problem?

(Your formula, by the way, is NOT for "compound [b]interest[/b]", it is for the final amount, the original amount plus interest. To find the interest alone, if that is what you are asked for, subtract the original amount.)

Answer 3

I believe the number of years must be an integer. To be accurate, the daily rate between years $2$ and $3$ can be calculated

Year $2$ principle*inerest rate in decimal

Then divide by $365$

Then multiply by $182.5$ which is half a year

Then add that to Year $2$ principle.