The Power of Compound Interest
Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out.
The Compounding Formula
The standard future value formula with compounding is:
A = P * (1 + r/n)^(n*t)
Where A is the final balance, P is the principal, r is the rate, n is the compounding frequency, and t is time in years.