Periodic Compound Interest Calculator

Periodic Compound Interest
Calculate:
Where: A = P(1 + r)t

Principal (P): $
Rate (R):   %
Periods (t):  

Answer:

A = $ 13,299.42

Compound Interest Equation

Current Calculation:
A = P(1 + r)t

Where:

  • A = Accrued Amount (principal + interest)
  • P = Principal Amount
  • I = Interest Amount
  • R = Rate of Interest per period in percent
  • r = Rate of Interest per period as a decimal
  • r = R/100
  • t = Number of Periods

Note that rate R, r and time t should be in the same time units such as months, quarters or years. R is entered in % but converted to r = R/100 and calculated in decimal form.

Compounding occurs once per period in this basic compounding equation but other calculators allow compounding more than once per period.

Compound Interest Formulas and Calculations:

Compounding occurs once per period in this basic compounding equation but other calculators allow compounding more than once per period utilizing A = P(1 + r/n)nt.

  • Calculate Accrued Amount (Principal + Interest)
    • A = P(1 + r)t
  • Calculate Principal Amount, solve for P
    • P = A / (1 + r)t
  • Calculate rate of interest in decimal, solve for r
    • r = (A/P)1/t - 1
  • Calculate rate of interest in percent
    • R = r * 100
  • Calculate time, solve for t
    • t = t = ln(A/P) / ln(1 + r) = [ ln(A) - ln(P) ] / ln(1 + r)

Example: You want to know the annual return, or interest rate, you revieved on investment you made 2 1/2 years ago (30 months ago) of $50,000 that is now worth $58,400.

  1. Compounding occured annually
    1. Select "Calculate Rate (R)"
    2. Enter:
      • Total P+I (A): $58,400
      • Principal (P): $50,000
      • Periods (t): 2.5
      • Answer: R = 6.4087% per period (year)
  2. Compounding occured monthly
    1. Select "Calculate Rate (R)"
    2. Enter:
      • Total P+I (A): $58,400
      • Principal (P): $50,000
      • Periods (t): 30
      • Answer: R = 0.519% per period (month)
    3. You can now use Nominal Interest Rate Calculator with period = month to find that an Effective Rate per Period of i = 0.519%, Compounded once per Period, m = 1, for Number of Periods n = 12, is 6.4088%/year.

References

Weisstein, Eric W. "Compound Interest." From MathWorld--A Wolfram Web Resource. http://mathworld.wolfram.com/CompoundInterest.html

http://www.principlesofaccounting.com/chapter24/chapter24.html#Compound

Compounding subtleties http://www.margill.com/white-paper-interest.htm

http://www.csun.edu/~tm856866/lectures/Math103_3_1_2_SolveForTime.pdf

http://www.purplemath.com/modules/expofcns4.htm#compound_interest

 

Cite this content, page or calculator as:

Furey, Edward "Periodic Compound Interest Calculator" From http://www.CalculatorSoup.com - Online Calculator Resource.