Compound Interest with Regular Contributions Formula
A = Future Value of investment
P = Principle amound invested (the original contribution)
PMT = Regular contributions (additional money added to investment)
r = Interest rate investment is earning
n = Number of times interest compounds
** i.e. 12 = monthly, 4 = quarterly, 2 = semi-annually, 1 = annually
t = Number of years investment will be active
Compound interest is interest that is added to the principle based on the number of times it is compounded for a given period. For the calculator on this page, not only is principle and interest accumulating interest, but monthly contributions are also accumulating interest. In the "real world" this can be used for personal savings or long term investments, for example 401k retirement savings accounts. You may have pay deducted on a weekly/semi-weekly/monthly basis and it gets applied to your 401k account. If your 401k were invested in the S&P, the average rate is 6-10% (pending the timeframe being reviewed). For the purposes of this example, the compounding interest (the frequency interest is earned on your investment) would be annually (so n = 1).
