Compound Interest Calculator
Compound interest generates interest on both initial principal and accumulated past interest. Over longer investment horizons, compounding creates exponential growth that outpaces simple interest significantly.
Calculated Result
Enter values to view result
Notice: Projections assume a steady rate of return without accounting for market volatility, inflation, tax liabilities, or fund fees.
Formula & Mechanics
A = P × (1 + r/n)^(n×t)
Where P is initial principal, r is annual decimal rate, n is compounding cycles per year, and t is time in years.
Worked Step-by-Step Example
Scenario: $10,000 invested at 7% compounded monthly for 10 years.
- r/n = 0.07 ÷ 12 ≈ 0.005833
- n×t = 12 × 10 = 120
- Evaluate formula: A ≈ $20,096.61
- Total interest accrued: $10,096.61
The investment doubles to $20,096.61 in 10 years.
Frequently Asked Questions
How does compounding frequency impact the outcome?
More frequent compounding (e.g., daily or monthly vs annually) results in slightly higher total yields because gains begin compounding sooner.
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