The compound Interest is calculated on the original amount (Principal amount) with the previously earned interest . To put it simply , it is interest on interest . The compounding process leads to a massive growth of wealth .
Assume on yearly compounding Interval
Principal (P) = 1000
Interest rate (r) = 10%
per year Time (t) = 3 years
Interest = 10% of 1000 = 100
Amount = 1000 + 100 = 1100
Interest = 10% of 1100 = 110
Amount = 1100 + 110 = 1210
Interest = 10% of 1210 = 121
Amount = 1210 + 121 = 1331
Total amount = 1331 Compound interest earned = 331
Enter the principal amount , Interest rate and Time . By default the compounding is set as yearly , if required you may change it to Half-yearly , quarterly , monthly . Within seconds you get the results .
Compounding Interest is the eighth wonder of the world . He who understands it , earns it ; he who doesn't , pays it . (quote by Albert Einstein)
The power of compounding lies in time. The more you hold , the more you earn .
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