Personal Finance
Compound balance
Grow the principal at the nominal rate compounded n times a year.
The Formula
Balance = principal x (1 + rate/n)^(n x t)
Grow the principal at the nominal rate compounded n times a year.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| P | Principal | currency | Starting balance. |
| r | Annual rate | rate | Nominal annual interest rate. |
| n | Periods per year | count | Compounding frequency. |
| t | Years | count | Time in years. |
What Each Symbol Means
Pcurrency
Principal
Starting balance.
rrate
Annual rate
Nominal annual interest rate.
ncount
Periods per year
Compounding frequency.
tcount
Years
Time in years.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate savings account interest page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Savings Account Interest, filed under Finance. Every number the guide produces comes from substituting into this one line.