# Periodic compounding

## 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.The amount function for compound interest is a power law function in terms of time.

Related formulas## Variables

A_{t} | The amount after t periods (dimensionless) |

A_{0} | The initial amount (dimensionless) |

r | Nominal annual interest rate expressed as a decimal. (dimensionless) |

n | Number of compounding periods per year (dimensionless) |

t | Total time in years (dimensionless) |