# Compound Interest Calculator

This is all in one Compound Interest Calculator with regular contribution, extra contribution, selecting compounding method, Investment Summary, Charts, Table and lot of additional features. Compound Interest Calculator can be used as Return on Investment Calculator, Future Value Calculator and Interest on Investment Calculator. It can be used as Investment Calculator, Savings Calculator, Inflation Calculator and many more other investment types of calculator.

Note: (1) Click on “Enable Editing” option after you see “Protected View” default message in excel sheet. (2) We have created separate version compatible for different spreadsheets.

## What is Compound Interest?

Compound interest means interest earned is added to initial principal amount. It is termed as Interest on Interest. It refers to reinvestment of original amount earned along with interest. Interest earned in next duration will be compounded based on principal plus accumulated interest. Compound interest enhances your earnings and helps to grow investment faster.

## Compound Interest Formula

Formula to calculate Compound Interest is mentioned below.

Compound Interest = (P (1 + R/N) ^ (NT)) – P

(or)

Compound Interest = FV – P

Here symbol ^ means “to the power of”. FV refers to formula P (1 + R/N) ^ (NT). R refers to rate of interest per annum, P refers to principal amount, N refers to number of times interest is compounded in a year, and T refers to number of years.

## Compound Interest Example

Let us take an example of compound interest to understand the above formula. Assume that you have invested 50,000 at 10% annual rate of interest for 12 years of term.

Here P is 50,000, R is 10%, N is 1 and T is 12 based on above example. Let us calculate compounding interest using the formula.

Compounding Interest = (50,000 (1 + 12% / 1) ^ (1 * 10)) – 50,000

Compounding Interest = 156,921 – 50,000 = 106,921

## What is Continuous Compounded Interest?

Continuous compounded interest means your principal amount is continuously receiving interest and the interest amount keeps earning on the interest received. This concept is evolved as a mathematical limitation of compound interest formula with the interest compounded infinite times per year. The idea to continuously compounding interest is not possible practically. Usually compounding interest is calculator for, monthly, quarterly, semi-annual and annual basis. Continuous compounding interest is actually a very rare case to compounding. You can refer to lump sum calculator in parallel to evaluate and understand the compounding effect.

## Continuous Compounded Interest Formula

Formula to calculate Continuous Compounding Interest is mentioned below.

Future Value = Principal * (e ^ (Rate * Number of Years))

Continuous Compounding Interest = Future Value – Principal

Here “e” refers to constant number 2.71828 and symbol ^ means “to the power of”.

## Continuous Compounded Interest Example

Let us take an example to calculate continuous compounding interest based on above formula. Consider the above scenario for an example.

Here Principal is 50,000, e is 2.71828, Rate is 10%, and Number of Years is 12 based on the above example. Let us use continuous compounding interest formula to evaluate.

Future Value = 50,000 * (e ^ (0.1 * 12)) = 166,005.85

Continuous Compounding Interest = 166,006 – 50,000 = 116,006

## What is Simple Interest?

Simple Interest means Interest earned only on amount invested. It is the money which is paid only on original amount that has been borrowed or invested. It does not accumulate interest portion as in compound interest.

## Simple Interest Formula

Formula to calculate Simple Interest is mentioned below.

Simple Interest = P * R * T

Here P refers to principal amount, R refers to rate of interest per annum and T refers to number of years.

## Simple Interest Example

Let us take an example of simple interest to understand the above formula. Consider the above scenario for an example.

Here P is 50,000, R is 10%, and T is 12 considering the above example. Let us calculate simple interest using the formula.

Simple Interest = 50,000 * 12% * 10

Simple Interest = 60,000

## Difference Between Simple Interest and Compound Interest

Let us see some of the important difference between simple interest and compound interest below.

• Return on investment are much higher as compare to simple interest.
• Principal amount increase and decrease in entire investment period for compound interest.
• Investment growth remains constant in simple interest method.
• Amount earned as Interest is on principal amount in simple interest.
• Interest earned is on accumulated interest plus principal amount in compound interest.
• You can earn 115,019 through compounding interest and 60,000 through simple interest for similar term based on above example.

## How to Use Compounding Interest Calculator?

It is really simple and straight forward to use it. You need to enter few basic investment details like: starting amount of investment, regular contribution, years of investment, Rate of Return, Compounding Method and Investment Start Date. Rest of all the details like: Investment Summary, Investment Chart and Table will be automatically updated after entering basic details.

Play with tool by changing the compounding method, add extra contribution and view the result. Get the customized look by changing company logo, tagline, name of your company and calculator name. You are not allowed to re-brand or sell without our written permission. Tools listed on our website can only be used for personal and internal purpose.

## Who can Use Compound Interest Calculator?

Here we have provided compound interest calculator with interactive table and colourful chart and table. You can use this all in one compound interest calculator as below calculators.

• Inflation Calculator
• Return on Investment Calculator
• Future Value Calculator
• Investment Calculator
• Savings Calculator
• Interest Calculator
• And Many More Types of Compounding Interest Calculators.

You can download Compound Interest Calculator excel sheet or google spreadsheet and play with it. Most importantly you can customize calculator according to your requirement. This will really assist you to provide interactive charts with personalized result to your customers.