Note: This is a work in progress and many formatting issues have been fixed. Read more about the project on the home page.
compound
compound(number1, number2)
where number1 represents the interest rate (expressed as a decimal) and number2 represents the number of periods over which the interest is compounded.
Value returned: value of one unit of principal invested at the interest rate and compounded over the specified number of periods, or a number equal to (1 + rate) ^ periods
An interest rate involves a certain percentage (expressed as a decimal) per some unit of time—usually per year. You must use the same unit of time to measure the number of periods.
For example, if you have a yearly interest rate that is compounded monthly, you must convert the yearly rate to the interest per month (rate / 12) and be sure to express the number of periods as months (2 years = 24 months).
Examples
Demo Script
on compoundDemo
set numberFormat to "0.00"
answer "$100 invested for 5 years at 5.75% interest" &&¬
"compounded quarterly yields $" & (100 * compound(.0575/4,5*4))
end compoundDemo
