💰 Compound Interest Calculator
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📌 Understanding Compound Interest
Compound interest is calculated using the formula:
- A = P (1 + R / N)^(N × T)
- Where:
- P = Principal amount
- R = Annual interest rate (as a decimal: percentage/100)
- N = Number of times interest is compounded per year
- T = Time in years
📌 Example Calculations
| Principal (P) | Rate (R%) | Time (T) Years | Compounds per Year (N) | Final Amount (A) |
|---|---|---|---|---|
| $1,000 | 5% | 2 | 4 | $1,104.94 |
| $5,000 | 4% | 3 | 12 | $5,638.79 |
| $10,000 | 6% | 5 | 2 | $13,489.08 |
🔧 Practical Applications of Compound Interest
1. Investments & Savings: Helps estimate future value of savings accounts and investment portfolios.
2. Loans & Mortgages: Determines the total amount owed over time with accumulated interest.
3. Financial Planning: Essential for retirement planning and long-term wealth accumulation.
❓ FAQs
Q1: How do I calculate compound interest?
✅ Use the formula A = P (1 + R / N)^(N × T)
Q2: What is the difference between simple and compound interest?
✅ Simple interest is calculated only on the principal, whereas compound interest is calculated on both the principal and accumulated interest.
Q3: Can compound interest be negative?
✅ No, unless the interest rate is negative.
Q4: Where is compound interest commonly used?
✅ It is widely used in investments, loans, and financial forecasting.
Q5: Why is compound interest important?
✅ It helps in understanding how money grows over time through reinvestment.
Compound Interest Calculator Playground
Explore 10 real-world scenarios with interactive charts.
Retirement Savings
Grow your retirement savings with an initial deposit and regular contributions.
College Fund
Plan for your child’s college expenses with consistent contributions.
Emergency Fund
Build your emergency fund with steady contributions.
Lump Sum Investment
See how a one-time investment grows over time.
Savings Account Growth
Watch your savings account balance grow with regular deposits.
CD Investment
Project the maturity value of your CD investment.
Wealth Building
Accumulate wealth over the long term with annual contributions.
Business Investment
Estimate the value of your business investment with reinvested profits.
Loan Interest Accumulation
See how a loan balance grows when interest compounds.
Time to Double Investment
Determine how long it takes for your investment to double and see the growth over time.