Compound Interest Calculator
Calculate the power of compounding
Input Details
Formula Used:
A = P × (1 + r/n)^(n×t)
Where: P = Principal, r = Annual Rate, n = Compounding Frequency, t = Time in Years
Results
Total Amount (A)
₹1.47 L
Principal (P)
₹1.00 L
Total Interest
₹46,933
Compound vs Simple Interest
Simple Interest
₹40,000
Compounding Benefit
+₹6,933
Principal vs Interest
Year-wise Breakdown
| Year | Opening Balance | Interest Earned | Closing Balance |
|---|---|---|---|
| 1 | ₹1.00 L | +₹8,000 | ₹1.08 L |
| 2 | ₹1.08 L | +₹8,640 | ₹1.17 L |
| 3 | ₹1.17 L | +₹9,331 | ₹1.26 L |
| 4 | ₹1.26 L | +₹10,078 | ₹1.36 L |
| 5 | ₹1.36 L | +₹10,884 | ₹1.47 L |
Frequently Asked Questions
Compound interest is interest calculated on both the initial principal and accumulated interest from previous periods. Unlike simple interest, your earnings also earn interest, leading to exponential growth over time.
The compound interest formula is A = P(1 + r/n)^(nt), where A is final amount, P is principal, r is annual interest rate, n is compounding frequency per year, and t is time in years.
Higher compounding frequency results in slightly higher returns. Daily compounding gives the best returns, followed by monthly, quarterly, half-yearly, and yearly. The difference is more significant for higher rates and longer periods.
Simple interest is calculated only on principal: SI = P × r × t. Compound interest is calculated on principal plus accumulated interest. Over time, compound interest grows exponentially while simple interest grows linearly.
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by the interest rate. For example, at 8% interest, money doubles in approximately 72/8 = 9 years.