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Compound interest is the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on.
- Amount = Principal + Interest
The amount A from a certain principal P after appying compound interest at the rate of 100r% per year in t years n times is
- If A = amount, P = principal, r = rate percent yearly (or every fixed period) and n is the number of years (or terms of the fixed period) the interest rates for the successive fixed periods are r1%, r2%, r3% ..., then A (amount) is given by
- Euler's number, where compounding continuously yields e.