What is Compound Interest?
Compound interest is interest computed on a loan or deposit based on the original principal and the cumulative interest from previous periods. It's essentially "interest on money that was previously earned as interest." When opposed to simple interest, which is determined just on the principal amount, this permits your balance and interest to grow at a quicker rate.
The rate at which compound interest accumulates interest is proportional to the number of compounding periods; the larger the number of compounding periods, the higher the compound interest rate.
How to calculate compound interest on a sum?
To calculate compound interest, you should use the following formula:
A = P(1 + r/n)nt
In the formula:
How to use tax2win’s compound interest calculator
A = Amount (principal + interest)
P = Principal amount
r = Annual nominal interest rate
R = Annual nominal interest rate
r = R/100
n = number of compounding periods per unit of time
t = time in decimal years;
I = Interest
To use tax2win’s compound interest calculator, all you need to do is enter the below-mentioned values:
- Principal Amount
- Estimated Interest Rate
- Compound Frequency
Once, you have entered the values in the given fields, the value will be displayed on the screen.
Benefits of using the compound interest calculator
There are a number of benefits that you can avail by using this calculator, some of them are:
Eligibility criteria for using a compound interest calculator
- It assists you in calculating an exact amount and percentage of returns over a specific time period.
- An accurate calculator can help you figure out just how much money you'll need over time for repayment. Tax2win provides you with a unique compound interest calculator that allows you to assign values based on your needs.
- a compound interest calculator may help you determine total returns as well as yearly returns. If this is the case, it's also a good idea to think about the investment corpus's pre-closure expenses.
Interest rate calculators can be a handy tool when trying to figure out how much you should be saving for your future. Anyone can use this calculator for computing the amount they will be receiving or paying on their investments.