The Compound Interest calculator computes the compounded interest based on a principal investment and a fixed interest rate over a period of time. In essence, this is the accumulated value of interest earned and principal on an investment with a fixed interest rate over a period of time.
INSTRUCTIONS: Choose your currency units (e.g. South African Rand-ZAR) and enter the following:
- (P) Principal invested (e.g. 350 Great Britain Pound - GBP)
- (r) Interest rate per period (e.g. 12% per year)
- (t) Number of periods (e.g. 12 years)
- (n) Number of payments per period (e.g. 12 payment in a year for "Compounded Monthly")
Compounded Interest (CI): The calculator returns the compounded interest in U.S. dollars (USD). However, this can be automatically converted into other currency units (e.g. Mexican Peso) via the pull-down menu.
Description
The Compounded Interest calculates the compounded interest earned and principal on an initial investment of a certain amount (P) at a fixed interest rate (r) over a period of time (t) with a number (n) of compounding events per period. This formula is commonly used for bank savings accounts and other simple investments. Banks often offer savings accounts with interest compounded daily. In that case, one might enter a number of years for the savings (t) and 365 compounding events (n) per period for the number of days in the year. Compounded interest was once regarded as egregious usury in the Roman Empire. Albert Einstein reportedly said that, "Compounded interest is the 8th wonder of the world. He who understand it, earns it. He who doesn't, pays it."
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- Current Mortgage Rates:
- 30 Year Fixed Interest Rate: 7.03 %
- 15 Year Fixed Interest Rate: 6.4 %
- 7/6 SOFR ARM: 7.04 %