👉 Cap math, or compound interest with periodic compounding, is a financial concept where interest is calculated and added to the principal at regular intervals (such as monthly, quarterly, or annually), leading to exponential growth of the investment or loan amount over time. Unlike simple interest, which is calculated only on the initial principal, cap math accounts for the interest earned on both the initial amount and any accrued interest, resulting in a higher total return. The formula for cap math is A = P(1 + r/n)^(nt), where A is the amount after time t, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years. The more frequently interest is compounded (higher n), the greater the total interest earned, making cap math crucial for understanding the long-term impact of investments and loans.
