# Compound interest formula - also known as annual interest

The formula for annual interest also known as compound interest is:

Where:

A = All (beginning amount + interest)

P = The beginning amount (principal sum)

r = The interest rate (expressed as a decimal)

n = The number of compounds per year (yearly n=1, monthly n=12, weekly n= 52)

t = Time (in years or time period)

NOTE:

If this were just compound interest formula then years = time period.

NOTE 2:

Most questions n = 1

Therefore the formula =A=P\ (1+r)^t