How is Compound Interest Calculated?
Compound interest is calculated using the compound interest formula: A = P(1+r/n)^nt. To calculate the compound interest for annual compounding, you need to multiply the initial balance by one plus your annual interest rate raised to the power of the number of time periods (years). This will give you a combined figure for the principal and the compound interest.
A = P(1+r/n)nt
Where:
- A = the future value of the investment
- P = the principal balance
- r = the annual interest rate (decimal)
- n = number of times interest is compounded per year
- t = the time in years
Compound Interest Calculator
Our Online Compound Interest Calculator tool can help you calculate the future value of your investment considering compound interest.
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