Compound Interest Calculator
Understanding compound interest is crucial for growing your wealth over time. Compound interest is essentially "interest on interest." It means that the interest earned on an investment or loan is added to the principal amount, and then the next period's interest is calculated on the new, larger principal. This snowball effect can significantly boost your returns or increase the cost of borrowing.
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
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 resultDiv = document.getElementById("result");
if (isNaN(principal) || isNaN(annualRate) || isNaN(compoundingFrequency) || isNaN(years) ||
principal <= 0 || annualRate < 0 || compoundingFrequency <= 0 || years <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var ratePerPeriod = annualRate / 100 / compoundingFrequency;
var numberOfPeriods = compoundingFrequency * years;
var futureValue = principal * Math.pow((1 + ratePerPeriod), numberOfPeriods);
var totalInterestEarned = futureValue – principal;
resultDiv.innerHTML = "Future Value: $" + futureValue.toFixed(2) + "" +
"Total Interest Earned: $" + totalInterestEarned.toFixed(2);
}