Compound Interest Calculator
Enter principal, rate, period, and compounding frequency to calculate final amount and total interest.
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How to Calculate
The Compound Interest Calculator uses the compound interest formula to compute the final amount.
Formula: A = P(1 + r/n)^(nt)
- P: Principal
- r: Annual rate (decimal)
- n: Compounding frequency per year
- t: Time in years
- A: Final amount
Compound interest earns interest on interest, and more frequent compounding leads to a higher final amount.
Example
FAQ
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal, while compound interest is calculated on both the principal and accumulated interest. Compound interest grows faster over longer periods.
Why is more frequent compounding better?
More frequent compounding means interest is added to the principal more often, so subsequent periods earn interest on a larger base. The difference depends on the rate and time period.
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