If interest compounds more often than annually it is difficult to. Compound Interest Equation A Accrued Amount principal interest P Principal Amount I Interest Amount R Annual Nominal Interest Rate in percent r Annual Nominal Interest Rate as a decimal r R100 t Time Involved in years 05 years is calculated as 6 months etc. Compound interest is taken from the initial or principal amount on a loan or a deposit plus any interest that has already accrued.
If in the above scenario the compounding period is every year then the compound interest will be Compound Interest P 1 rn nt P.
How to calculate simple interest You figure simple interest on the principal which is the amount of money borrowed or on deposit using a basic formula. Interest rate variance rangeRange of. To calculate compound interest use the formula below. If in the above scenario the compounding period is every year then the compound interest will be Compound Interest P 1 rn nt P.