# Compound Interest Calculator

**Principal:**The money you invest with a bank or investment company.

**Interest rate:**The amount of money you get paid yearly for every dollar you invest

**Time:**Length of time money will be in the bank or with the investment company.

**Compound Frequency:**How often interest is calculated.

Compounded yearly = 1

Compounded semiannually (6 month basis) = 2

Compounded quarterly (4 month basis) = 4

Compounded monthly = 12

Compounded daily = 365

To make navigation on this page easier, select the topic you are interested in learning more about:

- Compound Interest Formula

- Sample Problem

- Continous Compound Interest Formula

- Continously Compounded Interest Sample Problem

- Video Tutorial for Compounding & Simple Interest

## Video Tutorial

The following is a really good explanation of compounding interest and simple interest

## Compound Interest Formula

The formula to calculate compound interest (when finding A) is:

A = P(1 + r/n)

^{nt}

Where,

- A = Amount of investment after interest has been compounded
- P = Principal amount (initial investment)
- r = Annual interest rate
- n = Number of times the interest is compounded per year
- t = Number of years (time)

## Sample Compound Interest Problem

Jayden has $5,000 to invest. If he deposits the money in a savings account, the bank will pay him 4.7% interest compounded quarterly. How much will he have if he keeps the money in the savings account for 5 years.?

Find A using the formula. First determine your variables:

- P = $5,000

- r = 4.7%

- n = Quarterly (it will compound 4 times a year)

- t = 5

The formula will look like the following:

A = $5,000 (1 + .047/4)^{4 * 5}

A = $6315.89

Jayden will have $6315.89 if he invests his money for 5 years based on the interest compounding!

## Continuous Compound Interest Formula

To solve a problem where interest is compounded continuously, the formula is:A = Pe

^{rt}

where,

A = Amount of future value

P = Initial amount invested

e = Stands for Napier's number and is approximately 2.7183

r = Interest rate

t = Length of time investment will accrue

## Sample Continuous Compound Interest Problem

Haley has $5000 to invest in a bank savings account. The savings will accrue interest continuously at 4.7%, how much will she have after 5 years?A = $5,000 * 2.7183

^{.047 * 5}

She will have $6324.54 after her money has continuously compounded over 5 years.

As a side note, I made both sample problems have the same values. Notice that continuous interest will provide an additional $9 when compared to compound interest. While this is somewhat insignificant, if this was a large amount of money, it could be a significant difference!

### Welcome to Compound Interest Calculator!

Compound-InterestCalculator.com. We offer an easy to use Compound Interest Calculator. For school, business, or personal use. Input is always welcome (no pun intended!), contact us and we will review your suggestions.