# Calculate Compound Interest

## Formula for Compound Interest

## How the formula works

Compound interest is a great thing when you are earning it! Compound interest is when a bank pays interest on both the principal (the original amount of money) and the interest an account has already earned.

To calculate compound interest use the formula
below. In the formula, *A*
represents the final amount in the account after t
years compounded
'n' times at interest
rate 'r' with
starting amount 'p'.

## Practice Problems

**Note:** since the duration of time is half of a year, the
value of *t* in the is ½

6 months is half of a year, and *t* in the compound interest formula is
measured in years