Investopedia says that the formula for compound interest is
Ic = P[(1 + rN) − 1]
Which due to the Order of Operations can be heavily simplified to
Ic = PrN
(and I checked via Wolfram Alpha just to make sure I wasn't forgetting something basic here. Lol.)
Now, the thing Investopedia above just stated right after this is,
"Borrowing $1,000 at a 6% annual interest rate for 8 months means that you would owe $40.70."
However, I handwrote it out, calculated it with the basic Win7
calc.exe, and calculated it via Wolfram Alpha, but I cannot see what I'm misunderstanding here. No matter what I do, it always comes out as
$0.000 000 2, i.e.
0.000 02¢. Well, considering this is far less than $40.00, I figured there must be something I'm doing wrong, but I just can't figure it out.
Could you help me out here?