M5 · Mastery
Percentages
Compound interest
Formula
A = P (1 + r)^n
Rule
Interest is added to the total each period, so it grows exponentially.
Example
100 at 5% for 3 years = 100 x 1.05^3 = 115.76
Tip
Simple interest uses P x r x n, compound uses a power.
Learn this concept
Percentages & decimals