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how to calculate compound interest mentally. You figure simple interest on the principal which is the amount of money borrowed or on deposit using a basic formula. Compound interest is when a bank pays interest on both the principal the original amount of moneyand the interest an account has already earned.
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Range of interest rates above and below the rate set above that you desire to see results for. 10 on 1000 is an extra 100. Compund interest is as a result of reinvesting interest rather than paying it out so that interest in the next period is then earned on the principal sum plus previously accumulated interest.
Start with your example of investing 2000 at 3 interest over four years.
Total Value 206103 Total Interest 106103. At 5 interest save 1000 and it would take 72 divided by 5 equals 144 around fourteen and a half years. Use our quick and easy tools to calculate Compound Interest. The P in the formula above stands for your principal thats the amount that you start with.
