Compound interest is the interest calculated on the initial principal, which also includes all the accumulated interest from previous periods on a deposit or loan.
This means that interest is earned on both the initial amount of money and on the interest that has been added to it over time, leading to exponential growth.
The formula to calculate compound interest is:
A = P (1 + r/n)^(nt)Where:
- A = the amount of money accumulated after nnn years, including interest.
- P = the principal amount (the initial sum of money).
- r = the annual interest rate (in decimal form, so 5% becomes 0.05).
- n = the number of times that interest is compounded per year.
- t = the time the money is invested or borrowed for, in years.
To calculate the compound interest earned, you would subtract the principal amount P from the accumulated amount A
Compound Interest Calculator
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