This free online compound interest calculator, can accurately predict how profitable certain investments will be for your portfolio. You can find formulas to calculate annual compound interest and compound interest with regular additional contributions.
Gather information you need to calculate the annual compound interest:
Write down the formula: V = P(1+r/n)^{nt}
V = the future value of the investment
P = the principal investment amount
r = the annual interest rate
n = the number of times that interest is compounded per year
t = the number of years the money is invested for
Find out (1+r/n) — Divide the interest rate by the number of times the investment compounds and add 1 to the result
As an example, 6 percent divided by 12 equals 0.005. Than: 1+0.005 = 1.005
Find out (nt) — Multiply the number of times the loan compounds by the number of years you plan to keep the deposit. In the example, 1.5 times 12 equals 18
Find out (1+r/n)^{nt} — Raise the number calculated in Step 3 to the power of the number calculated in Step 4. In the example, 1.005 raised to the power of 18 is 1.09392894. This is the compound interest factor
Find out the total result — Multiply the compound interest factor by the deposit amount. In the example, 1.09392894 times $100 equals $109.40
Note: daily compound = 365; weekly compound = 52; monthly compound = 12; quarterly compound = 3; yearly compound = 1
Gather information you need to calculate the annual compound interest:
Write down 2 formulas: V = P(1+r/n)^{nt} and PMT × (((1 + r/n)^{nt} - 1) / (r/n))
V = the future value of the investment
P = the principal investment amount
r = the annual interest rate
n = the number of times that interest is compounded per year t = the number of years the money is invested for
PMT = the monthly payment
In a previous example we found the first formula result, it’s time to find the second one
Find out (1 + r/n)^{nt} — Divide the interest rate by the number of times the investment compounds and add 1 to the result, then raise the number calculated in previous step to the power of multiply the number of times the loan compounds by the number of years you plan to keep the deposit.
It is not hard, As an example, 6 percent divided by 12 equals 0.005. Than: 1+0.005 = 1.005 and 1.5 times 12 equals 18 and finally 1.005 raised to the power of 18 is 1.09392894. This is the compound interest factor.
Now find the next step result — (1 + r/n)^{nt} - 1. As an example: 1.09392894 - 1 is 0.09392894
Find out (r/n) — Divide the interest rate by the number of times the investment compounds%. As an example, 6 percent divided by 12 equals 0.005
Find out the next step — Divide the #5 step result by #6 step result. As an example, 0.09392894 / 0.005 = 18.785788
Find the second formula result — multiply your monthly deposit by the previous step result: As an example, $500 * 18.785788 = 9392,89
Find out your total deposit amount with interest — simply add the result of the first and second formulas. As an example, 109.40 + 9392,89 = 9502,29
We have already prepared an Excel formula — get access right now