Compound Interest Formula N. The compound interest formula is p 1 i n p where p is the principal i is the annual interest rate and n is the number of periods. The formula for compound interest is p 1 r n nt where p is the initial principal balance r is the interest rate n is the number of times interest is compounded per time period and t is the number of time periods.
And by rearranging that formula see compound interest formula derivation we can find any value when we know the other three. Finds the future value where. It s quite complex because it takes into consideration not only the annual interest rate and the number of years but also the number of times the interest is compounded per year.
With that we can work out the future value fv when we know the present value pv the interest rate r and number of periods n.
For example if an account is compounded monthly then one month. N number of periods. The compound interest formula is an equation that lets you estimate how much you will earn with your savings account. The basic formula for compound interest is.
