Compound Interest is calculated on the initial payment and also on the interest of previous periods.
Example: Suppose you give \$100 to a bank which pays you 10% compound interest at the end of every year. After one year you will have \$100 + 10% = \$110, and after two years you will have \$110 + 10% = \$121.
Click here to view some problem which can be solved by using this calculator.
Problem
If you deposit $4500 into an account paying 7% annual interest compounded semi anualy , how much money will be in the account after 9 years?
Result
The amount is $8358.7 and the interest is $3858.7.
Explanation
STEP 1: To find amount we use formula:
$$ A = P \left( 1 + \frac{r}{n} \right)^{\Large{n \cdot t}} $$ |
A = total amount P = principal or amount of money deposited, r = annual interest rate n = number of times compounded per year t = time in years |
In this example we have
$$ P = \$4500 ~,~ r = 7 \% ~ , ~ n = 2 ~ \text{and} ~ t = 9 ~ \text{years}$$After plugging the given information we have
$$ \begin{aligned} A &= 4500 \left( 1 + \frac{ 0.07 }{ 2 } \right)^{\Large{ 2 \cdot 9 }} \\ A &= 4500 \cdot { 1.035 } ^ { 18 } \\ A &= 4500 \cdot 1.857489 \\ A &= 8358.7 \end{aligned}$$STEP 2: To find interest we use formula $ A = P + I $, since $ A = $8358.7 $ and $ P = $4500 $ we have:
$$ \begin{aligned} A &= P + I \\ 8358.7 &= 4500 + I \\ I &= 8358.7 - 4500 \\ I &= 3858.7 \end{aligned}$$Share this result with others by using the link below.
You can click here to verify link or you can just copy and paste link wherever you need it.
This is a list of the example problems which can be solved by using this calculator.
Example 1: What will a deposit of \$4,500 at 7% compounded yearly interest be worth if left in the bank for 9 years?
Set up the form | View the solution |
Example 2: What will a deposit of $3,500 at 10% compounded monthly be worth if left in the bank for 8 years?
Set up the form | View the solution |
Example 3: How much money would you need to deposit today at 8% annual interest compounded monthly to have \$1200 in the account after 12 years?
Set up the form | View the solution |
Example 4: Find the present value of \$1,000 to be received at the end of 2 years at a 12% nominal annual interest rate compounded quarterly.
Set up the form | View the solution |
Example 5: What annual interest rate is implied if you lend someone $1,700 and are repaid $1,910 in two years?
Set up the form | View the solution |
Example 6: Suppose that a savings account is compounded monthly with a principal of \$1350. After 8 months, the amount increased to \$1424. What was the per annum interest rate?
Set up the form | View the solution |
Example 7: How long does it take for \$4,300 to grow into \$2,720 at 9% compounded quarterly?
Set up the form | View the solution |
Quick Calculator Search
Please tell me how can I make this better.