Calculating compound interest

  • 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.