Can you teach me about the compound interest formula and give me a sample equation?

Answer 1

Total amount = Principal (1 + i)^n

where (principal) is the amount of money you start with.

Total amount is principal and interest

i is the periodic interest rate as a decimal

n is the number of periods for which you are calculating compound interest.

For example:

if you invest $10,000 for 5 years at 6% interest

Total amount = 10000(1+0.06)^5
Total amount = 10000(1.06)^5
Total amount = 10000(1.338226)

Total amount = $13,382.26 is the amount you will have at the end of 5 yrs at 6%, compounded annually.

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