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What is the formula for calculating compound interest?

Curious about Compound interest

What is the formula for calculating compound interest?

The formula for calculating compound interest is:

A = P (1 + r/n)^(nt)

Where:
A = the future value or the total amount including interest
P = the principal amount (the initial amount of money)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested for

In this formula, the principal amount (P) is multiplied by the factor (1 + r/n) raised to the power of (nt), which represents the compounded interest over the given time period. The future value (A) represents the total amount including both the principal and the accumulated interest.

It's worth noting that the frequency of compounding (n) can vary. For example, if interest is compounded annually, n would be 1. If interest is compounded semiannually, n would be 2, and so on.

Keep in mind that this formula assumes that the interest is reinvested and added to the principal at each compounding period.

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