**Compound interest** is the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on.

## Formula

- Amount = Principal + Interest

The amount *A* from a certain principal *P* after appying compound interest at the rate of 100*r*% 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 r
_{1}%, r_{2}%, r_{3}% ..., then A (amount) is given by

## See also

- Euler's number, where compounding continuously yields e.

## Detailed Explanation on Compounding Interest

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