Compound Interest Calculator
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. It's often referred to as "interest on interest." This calculator helps you estimate the future value of an investment based on compound interest.
Understanding Compound Interest
Compound interest is a powerful concept in finance. Unlike simple interest, which is only calculated on the initial principal amount, compound interest is calculated on both the principal and the accumulated interest from previous periods. This means your money grows at an accelerating rate 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
The more frequently interest is compounded (e.g., daily vs. annually), the faster your investment will grow due to the effect of earning interest on interest more often.
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 resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(principal) || isNaN(annualRate) || isNaN(time) || isNaN(compoundingFrequency) || principal < 0 || annualRate < 0 || time < 0 || compoundingFrequency <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Convert annual rate from percentage to decimal
var rateDecimal = annualRate / 100;
// Calculate the future value
var amount = principal * Math.pow((1 + rateDecimal / compoundingFrequency), compoundingFrequency * time);
var totalInterest = amount – principal;
resultDiv.innerHTML =
"
Results
" +
"
Future Value of Investment: $" + amount.toFixed(2) + "" +
"
Total Compound Interest Earned: $" + totalInterest.toFixed(2) + "";
}
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