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Compound Interest Formula

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Future Value of Investment is the value of a current asset at a specified date in the future based on an assumed rate of growth over time. Check FAQs

FV = A \cdot {(1 + (\frac{i}{n}))}^{n \cdot T}

FV - Future Value of Investment?A - Principal Investment Amount?i - Annual Interest Rate?n - Number of Periods?T - Number of Years Money is Invested?

Compound Interest Example

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Here is how the Compound Interest equation looks like with Values.

Here is how the Compound Interest equation looks like with Units.

Here is how the Compound Interest equation looks like.

1.6E+9 = 100000 \cdot {(1 + (\frac{8}{2}))}^{2 \cdot 3}

1.6E+9 = 100000 \cdot {(1 + (\frac{8}{2}))}^{2 \cdot 3}

1.6E+9 = 100000 \cdot {(1 + (\frac{8}{2}))}^{2 \cdot 3}

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Compound Interest Solution

Follow our step by step solution on how to calculate Compound Interest?

FIRST Step Consider the formula

FV = A \cdot {(1 + (\frac{i}{n}))}^{n \cdot T}

Next Step Substitute values of Variables

∴

FV = 100000 \cdot {(1 + (\frac{8}{2}))}^{2 \cdot 3}

Next Step Prepare to Evaluate

∴

FV = 100000 \cdot {(1 + (\frac{8}{2}))}^{2 \cdot 3}

Next Step Evaluate

∴

FV = 1562500000

LAST Step Rounding Answer

∴

FV = 1.6E+9

Compound Interest Formula Elements

Variables

Future Value of Investment

Future Value of Investment is the value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Symbol: FV

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Future Value of Investment

Principal Investment Amount

Principal Investment Amount is most commonly used to refer to the amount borrowed or the amount still owed on a loan, separate from interest.

Symbol: A

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Principal Investment Amount

Annual Interest Rate

Annual Interest Rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets on annual basis.

Symbol: i

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Annual Interest Rate

Number of Periods

The Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.

Symbol: n

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Number of Periods

Number of Years Money is Invested

The Number of Years Money is Invested is the total number of years for which the money is invested.

Symbol: T

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Number of Years Money is Invested

Other formulas in Important Formulas of Investment category

Go Certificate of Deposit

CD = P0 Deposit \cdot {(1 + (\frac{r Annual}{n c}))}^{n c \cdot n t}

Go Capital Gains Yield

CGY = \frac{P c - P0}{P0}

Go Risk Premium

RP = ROI - Rf return

Go Total Stock Return

TSR = \frac{(P1 - P0) + D}{P0}

How to Evaluate Compound Interest?

Compound Interest evaluator uses Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested) to evaluate the Future Value of Investment, Compound interest (or compounding interest) is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Future Value of Investment is denoted by FV symbol.

How to evaluate Compound Interest using this online evaluator? To use this online evaluator for Compound Interest, enter Principal Investment Amount (A), Annual Interest Rate (i), Number of Periods (n) & Number of Years Money is Invested (T) and hit the calculate button.

FAQs on Compound Interest

What is the formula to find Compound Interest?

The formula of Compound Interest is expressed as Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested). Here is an example- 1.6E+9 = 100000*(1+(8/2))^(2*3).

How to calculate Compound Interest?

With Principal Investment Amount (A), Annual Interest Rate (i), Number of Periods (n) & Number of Years Money is Invested (T) we can find Compound Interest using the formula - Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested).

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Compound Interest Formula

Compound Interest Example

Compound Interest Solution

Compound Interest Formula Elements

Other formulas in Important Formulas of Investment category

How to Evaluate Compound Interest?

FAQs on Compound Interest

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