Compound Interest Calculator
What is a Compound Interest Calculator?
A compound interest calculator helps you estimate the value of your investment in the future using the power of compounding. Compared to simple interest, compound interest calculates interest on the accumulated value of principal and interest every year. The longer the investment is held, the more effective the compounding impact.
A CI calculator is an invaluable investment planning tool that helps you calculate and visualise exponential growth in your returns over time.
For example, if you invest Rs. 1,00,000 at an annual interest rate of 10% compounding annually
Interest in first year = 10% of 1,00,000 = 10,000
In the second year, interest will be calculated on the initial amount invested + interest earned
Principal in second year = 1,00,000 + 10,000 = 1,10,000
Interest at the end of second year = 10% of 1,10,000 = 11,000
Thus, interest calculation will be on accrued principal and interest every year.
Manually it is difficult to calculate the investment value year by year, a compound interest calculator makes this calculation easy with few inputs.
How to Calculate Compound Interest?
You need to know the initial value you invest i.e. principal amount, annual interest rate, time period, and compounding frequency to calculate compound interest.
The formula used for compound interest calculation is:
A = P (1 + r/n)^(nt)
Where:
- A = Maturity amount
- P = Principal amount
- r = Annual interest rate (in decimal)
- n = Number of times interest compounds per year
- t = Time in years
Final interest earned = Maturity Amount - Principal Amount
How to Use Rupeezy's Compound Interest Calculator?
- Step 1: Enter the principal amount (amount invested initially).
- Step 2: Enter the monthly contribution amount
- Step 3: Enter the time period (in years).
- Step 4: Input the annual interest rate (%).
- Step 5: Choose the compounding frequency (monthly, quarterly, or annually).
- Step 6: The calculator will show you the final maturity amount and interest earned.
