**Principal amount:**(P)

**Rate of interest:**(r)

**Period:**(t)

**Frequency:**(f)

The formula for annual compound interest, including principal sum, is:

A = P (1 + r/100f)^{(ft)}

Where:

A = the future value of the investment/loan, including interest

P = the principal investment amount (the initial deposit or loan amount)

r = the annual interest rate

f =The frequency i.e. the number of times that interest is compounded per year

t = The period i.e.the number of years the money is invested or borrowed for

Note that this formula gives you the future value of an investment or loan, which is compound interest plus the principal. Should you wish to calculate the compound interest only, you need to deduct principal amount from this. i.e. I=A-P