Finance & Interest
Basic

Compound Interest

Value of principal compounded n times per year.

Formula

A=P(1+rn)ntA = P\left(1 + \frac{r}{n}\right)^{nt}

Variables

PPrincipal
rAnnual rate
nCompounds/year
tYears

Example

$1000 at 5% compounded yearly for 3 years grows to 1000·1.05³ ≈ $1157.63.

Did You Know?

Einstein reputedly called compound interest the eighth wonder of the world — "he who understands it, earns it".

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