Compound Interest Calculator
This calculator estimates how a lump-sum investment or savings balance grows over time using compound interest. Enter the principal, annual rate, number of years, and compounding frequency to see the final balance and total interest earned.
How It Works
Where A is the final amount, P is the principal, r is the annual rate (as a decimal), n is compounding periods per year, and t is time in years. Common compounding frequencies: annually (n=1), quarterly (n=4), monthly (n=12), daily (n=365). More frequent compounding produces slightly higher returns.
Worked Examples
Example 1. $10,000 at 7% for 10 years, compounded annually. A = $10,000 × (1.07)¹⁰ ≈ $19,671.51. Interest earned: $9,671.51.
Example 2. $5,000 at 5% for 20 years, compounded monthly. A = $5,000 × (1 + 0.05/12)^(240) ≈ $13,601.96. Interest earned: $8,601.96.
When to Use This Calculator
Use for retirement savings projections, savings account growth estimates, or understanding the long-term effect of different interest rates and time horizons.
Frequently Asked Questions
What does compounding frequency mean?
How often interest is calculated and added to the balance. Monthly compounding adds interest 12 times per year; each addition then earns interest itself.
Does this include additional contributions?
No — this calculates growth on an initial lump sum only. It does not model recurring contributions like monthly 401(k) deposits.
What is the Rule of 72?
A quick estimate: divide 72 by the interest rate to find roughly how many years it takes to double your money. At 7%, that is about 72 ÷ 7 ≈ 10.3 years.