Compound interest

Input(s)

P: Principal Amount (currency unit)

$i_{n}$: Nominal Interest Rate (fraction per year)

m: Compounding or Interest Periods per Year (where 1 for Annually, 2 for Semi-annually, 4 for quarterly, and 12 for monthly) (dimensionless)

$\mathrm{t}$: The Loan Period or Investment Period (years)

Output(s)

I: Compound Interest (currency unit)

Formula(s)

$$ \mathrm{I}=\left(\left(1+\frac{\mathrm{i}_{\mathrm{n}}}{\mathrm{m}}\right)^{\mathrm{t} * \mathrm{~m}}-1\right) * \mathrm{P} $$

Reference(s)

Mian, M. A. 2011. Project Economics and Decision Analysis Volume 1: Deterministic Models, Second Edition. Tulsa, Oklahoma: PennWell Corporation. Chapter 2, Page: 27.