Compound Interest Calculator
Find the maturity amount and compound interest (CI) for any principal, rate and time, with yearly, half-yearly, quarterly or monthly compounding. A year-by-year table shows how your money grows, and a comparison shows how much more you earn than with simple interest.
| Year | Opening | Interest | Closing |
|---|---|---|---|
| 1 | ₹1,00,000 | ₹8,243.22 | ₹1,08,243.22 |
| 2 | ₹1,08,243.22 | ₹8,922.72 | ₹1,17,165.94 |
| 3 | ₹1,17,165.94 | ₹9,658.24 | ₹1,26,824.18 |
| 4 | ₹1,26,824.18 | ₹10,454.39 | ₹1,37,278.57 |
| 5 | ₹1,37,278.57 | ₹11,316.17 | ₹1,48,594.74 |
Step-by-step solution
- A = P × (1 + R ÷ (100 × n))^(n × T), with n = 4 (quarterly)
- = 1,00,000 × (1 + 8 ÷ 400)^(4 × 5)
- = 1,00,000 × (1.02)^20
- = ₹1,48,594.74
- CI = A − P = ₹1,48,594.74 − ₹1,00,000 = ₹48,594.74
- Simple interest for the same period would be ₹40,000, so compounding earns ₹8,594.74 extra.
How to use the compound interest calculator
- Enter the principal (P), the annual interest rate (R) and the time in years (T). Decimals like 2.5 years are allowed.
- Choose how often interest is compounded: yearly, half-yearly, quarterly or monthly.
- Read the amount, the compound interest, the year-wise growth table and the difference from simple interest.
Formulas
| Amount | A = P × (1 + R/(100n))^(nT)n = times compounded per year (1, 2, 4 or 12). |
|---|---|
| Compound interest | CI = A − P |
| CI − SI for 2 years (yearly) | P × (R/100)² |
| CI − SI for 3 years (yearly) | P × (R/100)² × (3 + R/100) |
Solved examples
Example 1: Find the CI on ₹10,000 at 10% per annum for 2 years, compounded yearly.
- A = 10,000 × (1.10)²
- = 10,000 × 1.21 = ₹12,100
Answer: CI ₹2,100
Example 2: Find the amount on ₹20,000 at 8% per annum for 1 year, compounded half-yearly.
- Rate per half-year = 4%, periods = 2
- A = 20,000 × (1.04)² = 20,000 × 1.0816
Answer: ₹21,632
Example 3: The difference between CI and SI on a sum at 5% for 2 years is ₹25. Find the sum.
- CI − SI = P × (5/100)²
- 25 = P × 1/400
Answer: ₹10,000
Why compounding frequency matters
When interest is compounded more often, each interest payment starts earning interest sooner. ₹1,00,000 at 8% for 5 years grows to about ₹1,46,933 with yearly compounding but about ₹1,48,595 with quarterly compounding. Most Indian bank fixed deposits compound quarterly.
The effective annual rate captures this: at 8% compounded quarterly, the effective rate is (1.02)⁴ − 1 ≈ 8.24% per year.
The Rule of 72
To estimate how long it takes to double your money with compound interest, divide 72 by the annual rate. At 9%, money doubles in about 8 years; at 12%, in about 6 years. It is a handy mental check for both exams and personal finance.
📘 Learn it in your NCERT syllabus
Free chapter notes, flashcards and quizzes on TalentJR CBSE.
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This topic regularly appears in the quantitative aptitude section of:
- SSC CGL & CHSL
- IBPS & SBI PO / Clerk
- RRB NTPC
- Campus placement aptitude tests
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Frequently asked questions
What is the formula for compound interest?
A = P × (1 + R/(100n))^(nT), where n is the number of times interest is compounded per year. Compound interest is A − P.
How is quarterly compound interest calculated?
Divide the annual rate by 4 and multiply the number of years by 4. At 12% for 2 years compounded quarterly, use 3% per quarter for 8 quarters.
How do I calculate compound interest for a fraction of a year?
This calculator applies the standard formula with fractional exponents. Some textbook problems instead use simple interest for the leftover fraction of a year, which can give a slightly different answer.
Is this the same as an FD calculator?
It uses the same formula banks use for cumulative fixed deposits with quarterly compounding. Actual maturity may differ slightly due to TDS, day-count rules and rounding.
Why is compound interest more than simple interest?
In the first compounding period they are equal. After that, compound interest also earns interest on previously earned interest, so the gap grows every period.
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