Calculating compound interest
IN THIS LESSON
- Like all other financial formulas, the compound interest formula looks quite complicated: A = P (1 + [ r / n ]) ^ nt
- Here, we will solve for “A,” A being the total amount of money you have at the end of your investment period.
- P represents the principal or initial investment amount that we defined last lesson.
- R is the annual interest rate in decimal format, and n is the number of periods or interest payment frequency.
- T stands for the length of time your money has to grow. Let’s go through a quick application of this calculation.