Calculate Mortgage Interest Rate

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Compound Interest Calculator

Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. It is the 'interest on interest' phenomenon. Compound interest is the most powerful force in finance, allowing your money to grow exponentially over time.

The formula for compound interest is:

A = P (1 + r/n)^(nt)

Where:

  • 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

Understanding compound interest is crucial for both investors looking to grow their wealth and borrowers managing debt. The longer your money has to compound, the greater the potential for growth. Even small differences in interest rates or compounding frequency can lead to significant divergences in outcomes over long periods.

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function calculateCompoundInterest() { var principal = parseFloat(document.getElementById("principal").value); var annualRate = parseFloat(document.getElementById("annualRate").value); var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value); var years = parseFloat(document.getElementById("years").value); var resultElement = document.getElementById("result"); if (isNaN(principal) || isNaN(annualRate) || isNaN(compoundingFrequency) || isNaN(years) || principal <= 0 || annualRate < 0 || compoundingFrequency <= 0 || years <= 0) { resultElement.innerHTML = "Please enter valid positive numbers for all fields."; return; } var rate = annualRate / 100; var time = years; var n = compoundingFrequency; var P = principal; var amount = P * Math.pow((1 + rate / n), (n * time)); var interestEarned = amount – P; resultElement.innerHTML = "

Results

" + "Future Value: $" + amount.toFixed(2) + "" + "Total Interest Earned: $" + interestEarned.toFixed(2) + ""; }

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