Compound Interest Calculator
Calculate how much a lump-sum investment grows with compound interest. Enter principal, rate, years, and compounding frequency to see the final amount and interest earned.
Calculator by Toolsloft ↗- Final amount
- $16,470.09
- Interest earned
- $6,470.09
This calculator shows how a lump-sum deposit grows over time once interest compounds on itself, returning both the final balance and the interest earned. Use it to project savings, a CD, or an investment given a rate, a time horizon, and how often interest is added.
How this is calculated
It uses the standard compound interest formula, final amount equals principal times (1 plus annual rate divided by compounds per year) raised to the power of compounds per year times years, with interest being that amount minus the principal.
How to use
- Enter the starting principal.
- Enter the annual interest rate and number of years.
- Choose how often interest compounds, then read the final amount and interest earned.
Examples
- $10,000 at 5% / 10 yr, monthly:
final $16,470.09 - 0% interest:
$1,000 over 5 yr → $1,000
FAQ
- What does compounding frequency mean?
- It is how often interest is calculated and added to the balance each year. Common choices are annually (1), quarterly (4), monthly (12), and daily (365). More frequent compounding earns slightly more because each addition starts earning interest sooner.
- Does more frequent compounding always earn more?
- Yes, for the same annual rate. Daily compounding beats monthly, which beats quarterly, which beats annual. The differences shrink as frequency rises, approaching a limit known as continuous compounding.
- How is the final amount calculated?
- Amount = P·(1 + r/n)^(n·t), where P is the principal, r is the annual rate (as a decimal), n is the compounds per year, and t is the number of years.