Compound Interest Calculator
Understanding how compound interest works is crucial for growing your investments over time. Compound interest is essentially interest earned on interest. Unlike simple interest, which is calculated only on the principal amount, compound interest takes into account the accumulated interest from previous periods. This can lead to significantly faster growth of your money, especially over longer time horizons.
The formula for compound interest is: A = P(1 + r/n)^(nt)
- A = the future value of the investment/loan, including interest
- P = the principal investment amount (the initial deposit or loan amount)
- r = the annual interest rate (as a decimal)
- n = the number of times that interest is compounded per year
- t = the number of years the money is invested or borrowed for
By using this calculator, you can explore how different principal amounts, interest rates, compounding frequencies, and time periods can impact the growth of your investments. Experiment with various scenarios to see the power of compounding in action!
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.calculator-result p {
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function calculateCompoundInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualRate = parseFloat(document.getElementById("annualRate").value);
var time = parseFloat(document.getElementById("time").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultElement = document.getElementById("result");
var finalAmountElement = document.getElementById("finalAmount");
var totalInterestEarnedElement = document.getElementById("totalInterestEarned");
// Clear previous results
finalAmountElement.textContent = "";
totalInterestEarnedElement.textContent = "";
if (isNaN(principal) || isNaN(annualRate) || isNaN(time) || isNaN(compoundingFrequency)) {
finalAmountElement.textContent = "Please enter valid numbers for all fields.";
return;
}
if (principal <= 0 || annualRate < 0 || time <= 0 || compoundingFrequency <= 0) {
finalAmountElement.textContent = "Please enter positive values for principal, time, and compounding frequency, and a non-negative value for the annual rate.";
return;
}
var ratePerPeriod = annualRate / 100 / compoundingFrequency;
var numberOfPeriods = compoundingFrequency * time;
var futureValue = principal * Math.pow(1 + ratePerPeriod, numberOfPeriods);
var totalInterest = futureValue – principal;
finalAmountElement.textContent = "Future Value: $" + futureValue.toFixed(2);
totalInterestEarnedElement.textContent = "Total Interest Earned: $" + totalInterest.toFixed(2);
}