Compound Interest Calculator
.calculator-container {
font-family: sans-serif;
max-width: 500px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
box-shadow: 0 2px 4px rgba(0, 0, 0, 0.1);
}
.calculator-title {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.calculator-inputs {
display: grid;
grid-template-columns: 1fr;
gap: 15px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input {
padding: 10px;
border: 1px solid #ddd;
border-radius: 4px;
font-size: 16px;
}
.calculator-inputs button {
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
transition: background-color 0.3s ease;
margin-top: 10px;
}
.calculator-inputs button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 25px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 18px;
text-align: center;
color: #333;
}
function calculateCompoundInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var time = parseFloat(document.getElementById("time").value);
var resultElement = document.getElementById("result");
if (isNaN(principal) || isNaN(annualInterestRate) || isNaN(compoundingFrequency) || isNaN(time) ||
principal <= 0 || annualInterestRate <= 0 || compoundingFrequency <= 0 || time <= 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var rate = annualInterestRate / 100;
var amount = principal * Math.pow((1 + rate / compoundingFrequency), compoundingFrequency * time);
var compoundInterest = amount – principal;
resultElement.innerHTML = "Total Amount: $" + amount.toFixed(2) + "Compound Interest Earned: $" + compoundInterest.toFixed(2);
}
Understanding Compound Interest
Compound interest is often called the "eighth wonder of the world" because of its power to grow wealth over time. It's the interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.
How Compound Interest Works
Unlike simple interest, which is only calculated on the principal amount, compound interest grows exponentially. This means that your earnings start earning money too. The more frequently interest is compounded, the faster your money grows.
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 compound interest earned is then calculated as A – P.
Factors Affecting Compound Interest
- Principal Amount: A larger initial principal will result in more interest earned.
- Interest Rate: A higher annual interest rate leads to faster growth.
- Compounding Frequency: More frequent compounding (e.g., daily vs. annually) generally yields higher returns.
- Time: The longer your money is invested, the more significant the effect of compounding. This is why starting early is crucial for long-term wealth building.
Example Calculation
Let's say you invest $10,000 (Principal) at an annual interest rate of 7% (0.07), compounded monthly (12 times a year), for 15 years.
- P = $10,000
- r = 0.07
- n = 12
- t = 15
Using the formula:
A = 10000 * (1 + 0.07/12)^(12*15)
A = 10000 * (1 + 0.0058333)^(180)
A = 10000 * (1.0058333)^180
A ≈ 10000 * 2.8353
A ≈ $28,353.26
The compound interest earned would be $28,353.26 – $10,000 = $18,353.26.
This calculator helps you estimate the growth of your investments or the cost of loans considering the power of compounding.