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
The following is a really good explanation of compounding interest and simple interest
The formula to calculate compound interest (when finding A) is:
A = P(1 + r/n)nt
- 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)
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!
A = Pert
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
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.