Financial
Compound Interest Formula & Calculator - Complete Guide
Learn the compound interest formula A = P(1 + r/n)^(nt) with examples. Free online compound interest calculator.
August 4, 20264 min read
The Compound Interest Formula
Compound interest is calculated using: A = P(1 + r/n)^(nt)
- A = Final amount
- P = Principal (initial investment)
- r = Annual interest rate (decimal)
- n = Number of times compounded per year
- t = Number of years
Example Calculation
$10,000 invested at 8% annual interest, compounded monthly, for 10 years:
A = 10000(1 + 0.08/12)^(12×10) = 10000(1.00667)^120 = $22,196.40
You earned $12,196.40 in interest on a $10,000 investment!
Try Our Calculator
Use our Compound Interest Calculator to calculate returns with different compounding frequencies and see year-by-year breakdowns.
Compounding Frequency Matters
Monthly compounding earns more than annual compounding because interest starts earning interest sooner. Daily compounding earns slightly more than monthly.