In this math lesson we will learn how to solve compound interest math problems. Click the play button to start the video.

Unlike the simple interest, the compound interest pays interest on both the principal and the interest already earned. To find the final balance after a certain number of years, use the following important formula:

B = p (1 + r)^t

B is the final balance

p is the initial principal

r is the interest rate per year

t is the time in years

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