Compound Interest Calculator
This grows a principal by compound interest. Enter the annual rate, the years, how often interest compounds, and an optional deposit paid at the end of each compounding period. 5% of 1,000 is 50. 1,000 at 5% compounded yearly for 2 years is 1,102.50.
How this is calculated
Interest is applied once per compounding period. A yearly rate of 5% compounded monthly uses 5% / 12 each month. Deposits are added at the end of each period, then earn interest afterward.
future = principal × (1 + rate/n)^(n×years) + deposit × (((1 + rate/n)^(n×years) − 1) / (rate/n))
- 1,000 at 5% compounded yearly for 2 years is 1,000 × 1.05² = 1,102.50. Interest earned is 102.50.
- 1,000 at 5% compounded monthly for 1 year, plus 100 at the end of each month, is about 2,279.05. Of that, 1,200 is deposits and about 79.05 is interest.
- A 0% rate does not grow. The future value is the principal plus any deposits.
Daily compounding uses 365 periods per year. A rate of −100% or worse cannot be compounded, because the growth factor would be zero or negative.
Not the same as
Compound interest repeats a rate over time. A one-time percent does not.
- What is X percent of Y? 5% of 1,000 is 50, once. Compound interest applies the rate again to the new total. Open percent of a number
- Increase by a percent Increasing 1,000 by 5% once gives 1,050. Two years of yearly compound interest gives 1,102.50. Open increase by a percent
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Compound interest questions
1,102.50. The interest earned is 102.50.
50. That is a single percent of a number, not compound interest. The same 1,000 at 5% for 2 years becomes 1,102.50.
Each deposit is added at the end of a compounding period, so it earns interest in later periods. It does not earn interest in the period it is deposited.
The future value is the principal plus the deposits. Nothing extra is earned.
The rate is applied more often, so interest starts earning interest sooner. 1,000 at 5% for 2 years is 1,102.50 yearly and about 1,104.49 quarterly.