Defining Compound Interest

Compound Interest is act of declaring interest to be principal or simply interest is compounded. Considering in more generalized form compound interest is paid on original principal and on accumulated interest. The frequency of compounding in every month may vary i.e. it can be yearly, half yearly, quarterly, monthly, daily etc.

For Example

When you borrow money from bank, you need to pay interest on that amount. Interest is fee charged for borrowing the money and it’s a percentage on principal amount for a particular tenure which may be a year.

Formula for calculating Compound Interest
A = P (1 + r)n
Where
A= Amount
P= Principal
R= Rate of Interest
N= no of years

While calculating compound interest you need to fill these details

• Principal amount of loan
• Rate of Interest of Loan
• Tenure of Loan
• Amount of Loan

And compound interest calculator will calculate details in fraction of time. . These calculators enable you to determine how much interest will be paid or accumulated.