Compound Interest Calculator
Compound interest earns interest on interest: 10 000 at 8 % compounded monthly for 5 years grows to 14,898.46.
14898.457083016
Full answer, then cut to fewer decimals (not rounded):
- 14898.457083016
- 14898.45708301
- 14898.4570830
- 14898.457083
- 14898.45708
- 14898.4570
- 14898.457
- 14898.45
- 14898.4
- Compound interest earned
- 4,898.46
- Effective annual rate (EAR)
- 8.29995 %
- Simple interest for comparison
- 4,000.00
Step-by-step solution
- FV = P × (1 + r/m)^(m × n)
- FV = 10,000.00 × (1 + 8 %/12)^(12 × 5)
- FV = 10,000.00 × 1.4898457 = 14,898.46
Compound Interest Formula
FV = P (1 + r/m)^(m × n)
P principal, r annual rate, m compounding periods per year, n years
Worked Example
10 000 invested at 8 % a year, compounded monthly, for 5 years:
- FV = P × (1 + r/m)^(m × n)
- FV = 10,000.00 × (1 + 8 %/12)^(12 × 5)
- FV = 10,000.00 × 1.4898457 = 14,898.46
Effective annual rate (EAR): 8.29995 % · Simple interest for comparison: 4,000.00
Compounding frequency and the effective rate
Interest compounded more often grows slightly faster: 10 % a year compounded monthly is an effective annual rate of 10.47 %. The formula FV = PV(1 + r/m)^(mt) needs the nominal annual rate r, m compounding periods per year and t years. Loans and savings quotes often give the nominal rate (APR); compare products by their effective annual rate. The rule of 72 gives a quick check: money doubles in about 72 ÷ rate years.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest SI = PRT/100 is earned only on the principal. Compound interest is added to the balance, so later interest is earned on it too: 10 000 at 8 % for 5 years gives 4000 simple interest but 4898.46 compounded monthly.
What is the effective annual rate?
EAR = (1 + r/m)^m − 1, the true yearly rate after compounding. 8 % compounded monthly is an EAR of 8.30 %.
How often should interest compound?
More frequent compounding gives a slightly higher return, but the effect shrinks: daily compounding of 8 % gives 8.33 % EAR versus 8.30 % monthly.
Sources
Last reviewed: . Factors are stored exactly and computed with 50-digit decimal arithmetic. See how we verify conversion factors.
Cite this page
APA
Scientific Converters. (2026, October 15). Compound Interest Calculator. Retrieved October 25, 2026, from https://scientificconverters.com/calculators/compound-interest-calculator/
IEEE
Scientific Converters, "Compound Interest Calculator," scientificconverters.com. Accessed: Oct. 25, 2026. [Online]. Available: https://scientificconverters.com/calculators/compound-interest-calculator/