Compound interest means that in investment or loan, when interest is recalculated, the previously generated interest is also included in the principal, so that the principal is continuously increased and more interest is obtained. The compound interest formula can be expressed as: a = p (1+r/n) (nt).

Where a represents the final total amount (including principal and interest); P stands for initial principal; R stands for annual interest rate; N represents the number of times of compound interest every year; T represents the number of years of investment or loan.

The formula can be decomposed into the following steps:

1. First calculate the interest rate of each compound interest, that is, the annual interest rate divided by the number of compound interest: I = r/n.

2. Then, calculate the number of times of compound interest, that is, the number of years of investment or loan multiplied by the number of times of compound interest: m=nt.

3. Next, add the interest rate of each compound interest to 1, and take the m power of the result as the multiplication factor: (1+I) m.

4. Finally, multiply the initial principal by the multiplier to get the final total amount: a = p (1+i) m.

For example:

Suppose you have a principal of 10000 yuan, with an annual interest rate of 5%, compound interest once a year, and continue to invest 10 years. Then, according to the above formula, the final total amount can be calculated: a =10000 (1+0.05/1) (1*10) =10000 (/kloc

This means that after 10 years of continuous investment, your principal will increase to about 16288.95 yuan, and the interest earned will be 6288.95 yuan. Note that compound interest calculation can make your investment get a higher return, because each interest calculation is based on the new total amount. This is different from simple interest calculation, which simply adds interest to the initial principal.

Compound interest is a very effective investment method, which can help the rapid growth of funds. However, it should be noted that the actual situation may be affected by various factors, such as taxes and inflation. Therefore, when calculating compound interest, we should consider it comprehensively in combination with the actual situation.