T is the time or total number of years. Every year the amount of interest were getting if we dont withdraw anything goes up. Finds the Present Value when you know a Future Value the Interest Rate and number of Periods.
You get interest on the interest from previous years.
N Number of Periods. Compound interest is when a bank pays interest on both the principal the original amount of moneyand the interest an account has already earned. The compound interest formula is. Compound Interest Formula P Principle i Annual interest rate t number of compounding period for a year i r n number of times interest is compounded per year r Interest rate In decimal.