Compound Interest Calculator – Find Formula, Check Example, Calculate & more

There are a proportionate number of investment options which pay interest on the basis of compound interest concept, which can be evaluated using Compound Interest Calculator below. Here, the invested amount, often referred to as principal amount is not constant as for the simple interest calculation.

The reason for changing principal amount is, each and every penny made on the investment in first interval is added up to the principal amount and then reinvested for the second interval. You will find a calculator at the end of this article to conveniently calculate CI based investments.

Compound Interest Calculator

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Compound Interest Calculator Details

The details you will need in order to find the CI are:

• Principal
• Rate per period
• Number of periods

So, as mentioned, you will be required a principal amount, rate per period and number of periods in order to determine the Compound Interest.

Principal is basically the amount which you will be investing at the start of the period, the rate per period is the percentage of interest which will be granted to the holder on the principal amount, and the time period, being the duration for which the holder keeps the principal amount invested. Using the factors as per the formula, the CI can be obtained.

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Compound Interest Calculator Product Details

Have you figured out the factors yet? Then it is absolutely seamless to obtain the result or in other words the CI based on the formula which is as well mentioned below.

The formula needs you to enter in the factors in the respective columns or fields, and there you will get the product i.e. the CI. This approach is basically adopted by investors who wish to know how much interest they will be able to make out of the principal amount.

On the contrary, if the investor wants to know the total effect on the principal amount at the end of given period, he/she needs to add the CI to the principal.

How to use Compound Interest Calculator?

We included a calculator in the article which is open for each and every reader to use. The prime motive was to set up a ground where everything is open and investors will be able to calculate a series of investment options in order to bid on the highest returns option.

The principal amount solely depends upon you, as it is the money you will be investing. Also evaluate the time period you wish to hold up to and the rate of return. Enter in all the factors in the calculator and wait for it to display the result. The calculator would do so in a fraction of seconds.

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Example of Compound Interest Calculator Usage

A person invests Rs.3000, which has a fixed rate of interest at the rate of 10% pa for 2 years. Here is what he will be having at the end of the said period, compounded annually.

The formula is:

Compound Interest = principal [(1+rate per period)^number of periods-1]

It you work out the given formula, or try it via the calculator, you will get.

CV = 3000[(1+0.10000)²-1]

So, if the person in question solves the above formula, he will be having an interest of Rs.630 with him, at the end of the period of 3 years, when the interest in compounded annually.

What is the use of Compound Interest Calculator?

Compound interest is used to calculate a wide array of financial aspects of the finance industry, including both the debt and credit related options.

It is basically used by companies and banks which offer investment options to the investors. Investors targeting on earning ample returns on investment or saving, must opt t invest based on the compound interest concept.

Here the margin of returns on the invested money is expanded and pushed beyond what simple interest based investments can offer. Banks use it majorly while providing loans or investment options in the form of various accounts, certificate of deposit and many more.

Compound Interest Calculator Formula

Let us note down the CI formula:

We have already worked on a fixed principal, clearly enough to know how the formula works. But, one important factor to be taken into consideration is that the CI is calculated based on the monthly, quarterly, yearly and half yearly, or maybe per day as well.

You need to calculate the CI based on the periods mentioned. For half yearly, the time period of a year will be 2, for months 12, for quarter 4 and so on.

Compound Interest Calculator – Conclusion

Calculator is provided with the motive of making your job of calculating the return on investment option easier. You can surely do it on your own, but you are subject to creating flaw or disorder in the equation.

This will not happen, given the precision of the calculator we put up. It also cuts up on your time, while weighing in a different set of investment options.

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