Compound Interest Calculator
Calculate the future value of an investment or loan with compound interest.
Compound Interest Parameters
Compound Interest Formula
Compound interest is calculated on the initial principal and also on the accumulated interest from previous periods.
Where:
- A = Future value of the investment/loan, including interest
- P = Principal investment amount (the initial deposit or loan amount)
- r = Annual interest rate (as a decimal)
- n = Number of times that interest is compounded per year
- t = Number of years the money is invested or borrowed for
Impact of Compounding Frequency (Example: $10,000 at 5% for 10 years)
| Compounding Period | Future Value |
|---|---|
| Annually | $16,288.95 |
| Semi-annually | $16,386.16 |
| Quarterly | $16,436.19 |
| Monthly | $16,470.09 |
| Daily | $16,486.65 |
Frequently Asked Questions
What is compound interest?
Compound interest is the interest earned on both the initial principal and the accumulated interest from previous periods. It's often called "interest on interest" and can significantly boost investment growth over time.
What is the formula for compound interest?
The formula for compound interest is A = P(1 + r/n)^(nt), where A = the future value of the investment/loan, including interest; P = the principal investment amount (the initial deposit or loan amount); r = the annual interest rate (as a decimal); n = the number of times that interest is compounded per year; t = the number of years the money is invested or borrowed for.
How often should interest be compounded?
The more frequently interest is compounded, the faster your investment grows. Common compounding periods include annually, semi-annually, quarterly, monthly, and daily.