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When a bank account pays compound interest, it pays interest not only on the principal amount that was deposited into the account, but also on the interest that has accumulated over time Suppose you want to deposit some money into a savings account, and let the account earn compound interest for a certain number of years. The formula for calculating the balance of the account after a specified number of years is:. A-P(1+m)nt The terms in the fomula are:. a. A is the amount of money in the account after the specified number of years. b. P is the principal amount that was originally deposited into the account. c. r is the annual interest rate. d. n is the number of times per year that the interest is compounded. e. t is the specified number of years.

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