Finance
Compound Interest Calculator – Tutorial
On this page, you can find the logic, usage, and important details of the Compound Interest Calculator calculator.
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What is Compound Interest?
In compound interest, each period's interest is added to the principal. The next period's interest is then calculated on the new, larger principal.
Formula
A = P × (1 + r)^n
- A: Total amount, P: Principal, r: Periodic rate (decimal), n: Number of periods
Example
$10,000 at 20% annually for 5 years → A = 10,000 × (1.20)⁵ ≈ $24,883 → Interest ≈ $14,883
Key Difference
- Simple interest: only on principal
- Compound interest: interest earns further interest each period