We all have saving accounts, and the effective use of this compound interest calculator is seen in this point only, the exciting thing about compounded is that it took a complete period to start or to end like a month of the year.
The advantage of compound interest calculator
• Using compound interest, you can perform daily computing, monthly computing and in addition to this, you can also go for quarterly compounded and monthly compounding.
The formula for compound interest calculator
The formula which is used for compound interest calculator is given below
The formula is v = P(1+r/n)^(nt)
• Here is this formula v represents the future value which will be given for instalment
• P represents for principal investment amount.
• In this formula = R is the annual interest rate; this means that it will represent annual interest rate which will be applied on your rate.
• N is the number of times that interest is compounded every year or in a yearly basis.
• And finally, here in this formula t is the number of years for which you are investing the money.
Example to understand compound interest?
• Suppose that you have a balance of 10,000 in your saving account and with an annual interest rate of 10 per cent, at the end of five years you will have 16,105.10 in your saving account as net balance, with an interest credit of 1,464.10 in the last year. But when you find that in the first year you got only 1,000 interest.
• In the second year, you have got attention on 12,100 balance, and it comes around to be 1,100
• In the third year, you have got interested in 12,100, and the interest credited to you was 1,210.
• This is the way the concept of compound interest works