Compound Interest Calculator

See how interest compounds monthly, quarterly or yearly.

Overview

Models exponential wealth growth where accumulated interest earns interest across annual, semi-annual, quarterly, or monthly compounding cycles.

Formula & Calculation Method

A = P × (1 + r/n)^(n×t) | CI = A - P

P = Principal investment, r = Annual interest rate (decimal), n = Compounding frequency per year, t = Duration in years.

Worked Example: ₹1,00,000 at 10% Compounded Annually for 10 Years

Inputs: Principal = ₹1,00,000 | Rate = 10% p.a. | Tenure = 10 Years (Compounded Annually)

  • Compounding factor = (1 + 0.10)^10 = (1.10)^10 = 2.5937
  • Total maturity corpus A = ₹1,00,000 × 2.5937 = ₹2,59,374
  • Compound interest generated = ₹2,59,374 - ₹1,00,000 = ₹1,59,374

Summary: Invested = ₹1,00,000 | Total Growth = ₹1,59,374 | Final Corpus = ₹2,59,374

Common Use Cases

  • Long-Term Wealth Projections: See how savings accounts, PPF, and reinvestment bonds grow over 10-30 years.
  • Inflation Erosion Analysis: Calculate how purchasing power diminishes over time due to compounding inflation.
  • Rule of 72 Planning: Estimate how many years it takes to double your initial capital (72 / rate).

Frequently Asked Questions

What is the Rule of 72?

A quick mental rule to estimate doubling time: divide 72 by the annual return rate (e.g. 72 / 12% = 6 years to double).

Does more frequent compounding always give higher returns?

Yes, monthly or daily compounding produces slightly higher effective returns than annual compounding at the same rate.

What is continuous compounding?

The theoretical limit where interest compounds infinitely often, calculated using Euler's number: A = P × e^(rt).

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