What is the compound interest formula?

The compound interest formula is A = P(1 + r/n)^(nt), where A is the final accrued amount, P is the principal investment, r is the annual interest rate in decimal, n is the number of compounding periods per year, and t is the time in years.

How does compound interest differ from simple interest?

Simple interest is calculated solely on the principal amount. Compound interest earns interest on both the initial principal AND the accumulated interest from prior periods, generating exponential growth over time.

Simple & Compound Interest Calculator

Forecast investment growth and calculate total interest earned over time.

Initial Principal ($)

Annual Interest Rate (%)

Time Period (Years)

Compounding

Ending Balance (Principal + Interest) —

Total Interest Earned —

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How Compound Interest Works

A = P × (1 + r / n)^(n × t)

Where:

• A = Final Accrued Amount

• P = Principal investment amount

• r = Annual nominal interest rate (decimal)

• n = Number of compounding periods per year

• t = Number of years

Frequently Asked Questions

What is the Rule of 72?

The Rule of 72 is a quick mental shortcut to estimate how many years it takes to double an investment with compound interest: divide 72 by the annual interest rate (e.g. at 6% interest, 72 / 6 = 12 years to double).

Why does compounding frequency matter?

The more frequently interest compounds (monthly vs. annually), the faster your money grows because you begin earning interest on your accumulated interest sooner.

Simple & Compound Interest Calculator

How Compound Interest Works

Frequently Asked Questions

What is the Rule of 72?

Why does compounding frequency matter?

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