Compounding Interest Calculation
- A = Accrued amount (principal + interest)
- P = Principal amount
- r = Annual nominal interest rate as a decimal
- R = Annual nominal interest rate as a percent
- r = R/100
- n = number of compounding periods per unit of time
- t = time in decimal years; e.g., 6 months is calculated as 0.5 years. Divide your partial year number of months by 12 to get the decimal years.
- I = Interest amount
- ln = natural logarithm, used in formulas below
Note that rate r and time t should be in the same time units such as months or years. Time conversions that are based on day count of 365 days/year have 30.4167 days/month and 91.2501 days/quarter. 360 days/year have 30 days/month and 90 days/quarter.