Compund interest formula

The standard compound interest formula is:

$$\boxed{A=P\left(1+\frac{r}{n}\right)^{nt}}$$

Where:

• $A$ = final amount
• $P$ = principal (starting money)
• $r$ = annual interest rate as a decimal
• $n$ = number of times interest is compounded per year
• $t$ = number of years

The interest earned is:

$$\boxed{I=A-P}$$

Example: $1,000 invested at 5% annually for 3 years, compounded annually:

$$A=1000(1+0.05)^3=\$1,157.63$$

So the compound interest earned is $157.63.