You can use the "power()" function to calculate an exponent in a formula field. For example,  to calculate simple interest with the following formula :  

(Principle  *  (1  +  0.08  /  365)  +  fee) ^ (Todaysdate - Issue_Date)

use the power() function as given below:

(Principle  *  (1  +  0.08  /  365)  +  fee).power(Todaysdate - Issue_Date))