Compound Interest means to add the accumulate interest in the initial investment. Initial Investment is also called Principal. It simply means that the calculated interest will be the interest calculated on the previous interest. This is why the addition of interest into the basic principal amount is called compounding. It may be noted that the interest rate is dependent upon the type of loan.

This Calculator can be helpful for you because it provides you the amount of interest that can be generated on some initial investment, provided that the interest is added back to the original amount that is the principal. Following is the formula that can be used to calculate Amount of interest:

• P is the basic amount
• r is the annual interest rate
• n is the number of times the interest is compounded in a year
• t is the number of years
• A is the amount after time t

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