Compound Interest Make A Formula. P is the principal the initial amount you borrow or deposit r is the annual rate of interest percentage. S Final Dollar Value.
In other words the interest is reinvested to earn more interest.
This is the basic formula for Compound Interest. Under this method the interest is charged on principal plus any accumulated interest. Heres how you would get that answer using the formula and applying it to the known variables. Suppose you give 100 to a bank which pays you 10 compound interest at the end of every year.