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Our online tools will provide quick answers to your calculation and conversion needs. On this page, you can calculate compound interest given principal, interest rate, and time period. The compounding period can be set to daily, weekly, monthly, quarterly, half-yearly and yearly.
Compound interest is different from simple interest, in that, the interest amount is added to the principal after every compounding period. The new amount is used for calculating the interest until the next compounding period and so on.
|1st year||2nd year||3rd year|
The compound interest formula:
A = P(1+r/n)⌊nt⌋
CI = A-P
CI = Compound interest
A = Final amount
P = Principal (Initial investment)
t = Total time in years
n = Number of compounding periods per year
r = Annual interest rate in percentage
Here are some examples showing you how to solve for different variables using the compound interest formula.
Example 1. What is the compound interest of 75000 at 7.9% per annum compounded semi-annually in 3 years?
Ans. A = P(1+r/n)nt
We have P=75000, n=2, t=3, r=7.9/100
A = 75000(1 + (7.9 / 100) / 2)6 = 94625.51
Interest = A - P = 94625.51 - 75000 = 19625.51
Example 2. In how many years will a amount double itself at 10% interest rate compounded quarterly?
Ans. t = (log(A/P) / log(1+r/n)) / n
We have n=4, r=10/100, A=2, P=1
t = log(2) / log(1 + 0.1 / 4) / 4 = 7.2 years
Example 3. If interest is compounded daily, find the rate at which an amount doubles itself in 5 years?
Ans. r = ((A/P)1/nt - 1) × n
r = (21/(365×5) - 1) × 365 = 0.1386 = 13.86% per annum