# Compound Interest Calculator

Principal Amount:
Annual Interest Rate (%):
Time (in years):
Compounding Period:
Compound Interest: \$0.00

## Concepts

Compound interest is earned on both the principal amount and the accumulated interest. It is calculated by multiplying the interest rate by the account balance at the end of each compounding period. This means that the interest earned each period is added to the principal, so the account balance grows at an increasing rate.

The formula for calculating compound interest is:

``````A = P(1 + r/n)^nt
``````

where:

• A is the future value of the investment
• P is the principal amount invested
• r is the annual interest rate
• n is the number of times interest is compounded per year
• t is the number of years the money is invested

For example, if you invest \$1,000 at an annual interest rate of 5% compounded annually for 10 years, the future value of your investment will be \$1,610.51. This is because the interest earned each year will be added to the principal so that the account balance will grow at an increasing rate.

## Benefits

There are several benefits to using a compound interest calculator:

• Accuracy: Compound interest calculators are very accurate. They can calculate compound interest with a high degree of precision.
• Convenience: Compound interest calculators are very convenient to use. They are available online and can be used anywhere with an internet connection.
• Speed: Compound interest calculators can perform calculations very quickly. This can be helpful for students, investors, and other professionals who need to calculate compound interest regularly.

## Interesting facts

Here are some interesting facts about compound interest:

• Albert Einstein reportedly called compound interest “the eighth wonder of the world.”
• Compound interest has been used for centuries to finance businesses, governments, and individuals.
• The power of compound interest can be seen in the stock market, where long-term investors have historically earned an average annual return of around 10%.

## References 