P is the original principal sum P is the new principal sum r is the nominal annual interest rate n is the compounding frequency t is the overall length of time the interest is applied expressed using the same time units as r usually years. The basic formula for Compound Interest is. Since the previous interest amount is reinvested the interest amount increases marginally every year.
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The compound interest formula in maths is. The compound interest formula is P 1in - P where P is the principal i is the annual interest rate and n is the number of periods. This is not the case in compound interest. FV PV 1r n.