Compound Interest Calculator

 

This calculator shows how much money you will have after a period of time, based on initial amount invested, interest rate, and the number of times compounded.

Amount Invested (P):              $

Annual interest rate (r):         %

Period of Time (t):                       

Compound Frequency (n):     
(Annual=1, Semi-Annual=2, Quarterly=4, Monthly=12)

               

    

Interest and Principal  (A):          $

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.