The compound interest formula A = P(1 + r/n)^(nt) is one of the most powerful equations in personal finance. It calculates how an investment or loan balance grows exponentially when interest is added to the principal repeatedly. Unlike simple interest, which grows linearly, compound interest creates accelerating growth over time — which is why early investing can turn modest savings into substantial wealth. This page explains each variable, multiple examples, and key compounding frequency effects.