# 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

S | Value after t periods (dimensionless) |

P | Principal amount (initial investment) (dimensionless) |

j | Annual nominal interest rate (not reflecting the compounding) (dimensionless) |

m | Number of times the interest is compounded per year (dimensionless) |

t | Number of years the money is borrowed for (dimensionless) |