It is the definition of terms in a financial equation like FV = PV (1+r/100)^n
If you have a present value (initial deposit) of $50 and and annual interest (r) of 6 percent compounded annually for 7 years(n), it would look like this:
FV = 50 (1+6/100)^7
FV =$ 75.18 Would be your Future value after 7 years
There are SCADS of other financial equations that use these terms in various ways.....