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 Skip Navigation LinksMath Help > Basic Math > Word Problems and Basic Arithmetic > Compound Interest

Here are the formulas for the growth of an amount of money deposited in an interest-bearing account.  The initial deposite is P, which grows to A by the end of the term of deposit.

Let

P = principle amount
r = interest rate (per year)
t = number of years
n = compounding frequency (number per year)
A = total principle plus interest accumulated during this time.

Then

A = P (1 + r/n)nt

As n approaches infinity (continuous compounding)

A approaches P ert

Internet references

Math League: Percent and Probability (Percent, ...as a fraction, ...as a decimal, Estimating percents, Interest, Simple interest, Compound interest, Percent increase and decrease, Percent discount, Chances and probability, Possible outcomes of an event)

Related pages in this website

  Exponential Limit - Limit of (1+1/n)^n = e, etc.
 

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