How it works
A = P × (1 + r/k)k×t
where P is the principal, r is the annual rate as a decimal, k is the number of compounding periods per year (1, 12 or 365) and t is the number of years. Interest earned = A − P. No additional contributions or taxes are assumed.
Worked examples
$10,000 at 5% for 10 years, compounded monthly
Final amount: $16,470.09; interest earned: $6,470.09.
$5,000 at 4% for 20 years, compounded annually
Final amount: $10,955.62; interest earned: $5,955.62. With daily compounding it would grow to $11,127.22.
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