# What is the formula for compounded interest and how do you work out a problem

Question
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What is the formula for compounded interest and how do you work out a problem

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Step 1

The aim is to find the formula for compund interest and teh way to work out.

Step 2

Formula for compounded interest:

The formula for compound interest, including principal sum will be as given below:

A=P(1+r/n)(nt)

Where:

A=The future value of the investment including interest.

P= The initial deposit

r = The annual interest rate

n = the number of times that interest is compounded per unit t

t= the time period the money is borrowed or invested for.

Step 3

For example:

If an amount of \$2,000 is deposited into savings account at an annual interest rate of 6% which...

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