Compound Interest Calculator

Understanding Compound Interest

The Power of Compounding

Compound interest is "interest on interest" - it calculates interest on both the initial principal and the accumulated interest from previous periods.

The Compound Interest Formula

A = P(1 + r/n)^(nt)
Where:
A = Final amount
P = Principal amount
r = Annual interest rate (decimal)
n = Compounding periods per year
t = Time in years

Example Calculation (Monthly Compounding)

For ₹10,000 at 8% for 3 years compounded monthly:
r = 8/100 = 0.08
n = 12
A = 10000(1 + 0.08/12)^(12×3) ≈ ₹12,702
Interest Earned = ₹2,702

Key Factors Affecting Growth

• Time: Longer periods dramatically increase growth
• Rate: Higher interest rates accelerate growth
• Frequency: More compounding periods increase returns

Compounding Frequency Comparison

₹10,000 at 8% for 5 years:

• Annually: ₹14,693
• Quarterly: ₹14,859
• Monthly: ₹14,898
• Daily: ₹14,917