The compound interest formula is as follows requires iteration. Compound interest is calculated on the principal amount plus any accumulated interest accrued at the start of a period. Therefore if both simple and compound interests have the same rate the interest generated will always be higher when compounding.
To calculate compound interest monthly simply set the compounding frequency setting on the calculator above to monthly Alternatively you can use the formula above and set n equal to 1 and t equal to 12 to find out how much money youll have if interest is compounded monthly for a year.
P Principle i interest rate in percentage terms n number of compounding. Principal x Rate x Time Interest p x r x t. You figure simple interest on the principal which is the amount of money borrowed or on deposit using a basic formula. Determine the term of the loan or investment in.