Examples of finding the future value with the compound interest formula Example. The formula for compound interest is P 1 rn nt where P is the initial principal balance r is the interest rate n is the number of times interest is compounded per time period and t is the number of time periods. Well use basic math to demonstrate compound interest first.
We need to understand the compound interest formula.
So the initial amount of the loan is then subtracted from the resulting value. The compound interest formula contains the annual percentage yield formula of This is due to the annual percentage yield calculating the effective rate on an account based on the effect of compounding. T The number of times the interest compounds yearly. If this gives you scary high school flashbacks skip to the next section for the spreadsheet version.