Calculate compound interest with options for regular deposits, compounding frequency, tax rate, and inflation.
How to Calculate Compound Interest
Compound interest accrues on both the principal and accumulated interest: A = P(1 + r/n)^(nt)
- P: Principal amount
- r: Annual interest rate (decimal)
- n: Compounding periods per year
- t: Time in years
How it Works & Formula
A = P(1 + r/n)^(nt)
Calculates compound interest where P is principal, r is the annual rate, n is compounding frequency per year, and t is time in years.
Practical Examples
Example 1: Daily Compounding Savings
Investing $5,000 at 5% interest compounded daily for 5 years yields $6,420.13, which is higher than monthly or annual compounding.
Frequently Asked Questions
What is compound interest?
Interest calculated on the initial principal and also on the accumulated interest of previous periods ("interest on interest").