* When entering the percentage value, input the percentage without a decimal -- i.e. 5% is 5; the calculator considers the decimal
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
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)