A P 1 rnnt. Compound interest or interest on interest is calculated with the compound interest formula. A P Where P Principal R Rate of interest pa per annum ie annually.
If the Rate of Interest is Annual and Interest is Compounded Quarterly then the number of years is multiplied by 4 ie.
Raise the sum to the fourth power because interest compounds four times per year. N is the number of periods. Compound Interest Formula With Interest Paid Quarterly. For example if the annual interest rate equals 404 percent divide 00404 by 4 to get a quarterly interest rate of 00101.