With this free compound interest calculator, one can calculate the compound interest based on the given principal amount, rate of interest, time period in years and months and interval. This is a useful tool for math students studying the topic “Interests”, specifically, “Compound interests”. This is an easy-to-use tool for all. And can give the solution for monthly compound interest as well as quarterly, half-yearly and annually.
How to use the compound interest calculator tool
Step 1 : Enter the principal amount in USD currency.
Step 2 : Enter the rate of interest %
Step 3 :Enter the time period in years and months
Step 4 : Select the compound interval from the drop-down. It can be either Monthly, Quarterly, Half-yearly or Annually.
Step 5 : Click the Calculate button.
The results that will be shown are Compound Interest Amount and Compounded Interest Amount in USD currency ($).
Compound interest is a concept that is widely used in banking and finance. It is a way of calculating the interest on a sum of money over a period of time. Compound interest is different from simple interest, which is calculated based only on the initial principal amount. With compound interest, the interest earned each year is added to the principal amount, and interest is then calculated on the new total amount. This means that the interest earned each year increases, and the amount of interest earned over time can be significant. In this article, we will discuss what compound interest is, how it works, and provide a detailed guide on how to use an online compound interest calculator.
What is compound interest?
Compound interest is the interest earned on both the principal amount and any accumulated interest. The interest earned is added to the principal amount, and interest is then calculated on the new total amount. This means that the interest earned each year is higher than the previous year, and the amount of interest earned over time can be significant.
For example, suppose you invest $10,000 in an account that earns 5% interest compounded annually. At the end of the first year, the interest earned would be $500. This would bring the total amount in the account to $10,500. In the second year, interest would be calculated on $10,500, and the interest earned would be $525. This would bring the total amount in the account to $11,025. As you can see, the interest earned each year increases, and the amount of interest earned over time can be significant..
How to calculate compound interest
To calculate compound interest, you need to know the principal amount, the interest rate, the number of compounding periods, and the time period. The formula for compound interest is:
\text{A = P}\left(1 + \frac{\text{r}}{\text{n}}\right)^{\text{(nt)}}where:
A is the amount of money in the account after the time period has elapsed P is the principal amount r is the annual interest rate n is the number of times the interest is compounded per year t is the time period in years
For example, suppose you invest $10,000 in an account that earns 5% interest compounded annually for five years. The formula for calculating the amount of money in the account after five years would be:
\text{A} = \$10000 \left(1 + \frac{0.05}{1}\right)^{(1 \times 5)}\text{A} = \$12762.82This means that after five years, the account would have a total of $12,762.82.
Using an online compound interest calculator
Calculating compound interest by hand can be time-consuming and error-prone, particularly when working with large or complex numbers. Luckily, there are many online calculators available that can do the work for you. These calculators are free, easy to use, and can calculate compound interest in seconds.
