wikiHow Compound Interest Calculator Compound interest is interest calculated on the initial principal amount as well as on the accumulated interest from previous periods. The formula for calculating compound interest is: A = P(1 + r/n)^(n*t) where: A is the final amount P is the principal amount r is the annual interest rate (as a decimal) n is the number of times the interest is compounded per year t is the number of years the money is invested Here are the steps to calculate compound interest: 1. Determine the principal amount (P) that you're investing. 2. Determine the annual interest rate (r) as a decimal. For example, if the annual interest rate is 5%, the decimal rate is 0.05. 3. Determine the number of times per year that the interest is compounded (n). For example, if the interest is compounded monthly, n is 12. If it's compounded quarterly, n is 4. 4. Determine the number of years (t) that the money will be invested. 5. Plug the values of P, r, n, and t into the formula and solve for A. Here's an example to illustrate how this formula works: Let's say you invest $10,000 for 5 years at an annual interest rate of 6%, compounded monthly. P = $10,000 r = 0.06 n = 12 t = 5 A = P(1 + r/n)^(nt) A = $10,000(1 + 0.06/12)^(125) A = $13,382.98 So the final amount after 5 years with compound interest is $13,382.98. Page