Compound Interest Formula

This figure depicts the graph of the compound interest formula given some example values.

Formula

Summary

The compound interest formula calculates the growth of a principle amount with compounding interest over time.

Expression Description
Accumulated amount.
Principle amount.
Rate of interest expressed as a decimal value.
Frequency of investment per time period.
Time elapsed.

Usage

The compound interest formula calculates the growth of a principle amount with compounding interest over time. For example, given an interest rate of , a principle amount of , time elapsed of and a yearly investment strategy , the formula calculates the accumuled amount. This is shown below.

Examples

Quarterly Interest

This example calculates the accumulated value of an investment given an interest rate of , a principle amount of , time elapsed of and a quarterly investment strategy . This is shown below.

Note, while the interest rate is , the interest rate applied for each quarter is only .

Monthly Interest

This example calculates the accumulated value of an investment given an interest rate of , a principle amount of , time elapsed of and a monthly investment strategy . This is shown below.