Compound Interest Calculator

Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. It is the addition of interest to the principal sum of a loan or deposit, and is calculated using the formula:

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

Understanding compound interest is crucial for both investors looking to grow their wealth and borrowers understanding the true cost of debt. The longer your money compounds, and the more frequently it's compounded, the faster it grows.