Compound Interest Calculator (Educational)

Why Compound Interest Is Taught

Compound interest is a mathematical concept that shows how interest is calculated not only on the original amount, but also on the accumulated interest from previous periods. This concept is widely taught in mathematics and economics to explain exponential growth.

What Is Compound Interest?

Compound interest means that interest is added to the original amount at regular intervals. Once added, future interest calculations are performed on this new total.

Compound Interest Formula

A = P × (1 + r / n)^{n × t}

P = Initial amount (principal)
r = Annual interest rate (decimal)
n = Number of times interest is compounded per year
t = Time in years
A = Final amount after compounding

Try the Compound Interest Calculator

Initial Amount Annual Interest Rate (%) Time (in years) Compounding Frequency

Step-by-Step Explanation

1. The interest rate is converted from a percentage to a decimal.
2. The rate is divided by the compounding frequency.
3. The total number of compounding periods is calculated.
4. The formula is applied to determine the final amount.

What You Learn From This Tool

How repeated compounding affects totals
Why compounding frequency matters
How exponential growth differs from simple growth

Common Misunderstandings

Compound interest is not calculated once — it repeats
Higher frequency does not mean linear growth
Time plays a major role in compounding effects

Important Educational Notice:
This calculator is provided for learning and understanding purposes only. The results are simplified mathematical estimates and should not be interpreted as financial advice, predictions, or real-world outcomes.

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