Compound interest

Description

Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. This addition of interest to the principal is called compounding. There is a formula for calculating annual compound interest.

Related formulas

Variables

SValue after t periods (dimensionless)
PPrincipal amount (initial investment) (dimensionless)
jAnnual nominal interest rate (not reflecting the compounding) (dimensionless)
mNumber of times the interest is compounded per year (dimensionless)
tNumber of years the money is borrowed for (dimensionless)