The P in the formula above stands for your principal thats the amount that you start with. 5000 dollars is deposited in an account P 5000. To understand compound interest first start with the concept of simple interest.
Continuously Compounded Interest is a great thing when you are earning it.
The rate of interest is 6 per year. This means that your interest is being compounded annually at 6. Here P denotes the principal r represents the annual interest rate n is the number of times the interest is compounded per year and t is the time in years. Suppose you give 100 to a bank which pays you 10 compound interest at the end of every year.