Centre for Distance Learning and Innovation

Focus L: Compound Interest and a New Look at Exponential Functions

Divide the interest rate, expressed as a decimal, by the number of compounding periods, n.
Add this result to 1.
Raise this expression to the power of n, the number of compounding periods.
Multiply the result by the initial investment.
Essentially, the formula is

Note: To determine the value of an investment, after t years, use the formula below.