This video explains how to calculate compound interest using the most common formula to do so. This video takes the equation A=P(1+(r/n))^nt. A stands for the initial amount, P is the principal, r is the interest rate, n is the amount of times interest compounds per year, and t is the amount of years of your investment. In the video, he uses the scenario of $3000 initial investment, an annual interest rate of 5% that is compounded monthly (making your n=12 months), over the time period of seven years. When you solve the equation, your ending amount after the interest has been compounded.
This video helps me understand this equation because it breaks it down into steps to help make it more understandable. I am a visual learner that likes to learn by example. When I see an equation such as the one above, I often get overwhelmed by the series of numbers and letters and never know where to start first. Having someone break this equation down by using real life scenarios helps me to understand the equation as a whole to then apply it to my own situation or problem set.