Compound Interest Formula Investment
Looking for compound interest formula investment? Compound interest formula has five symbols, P: principal, A: amount, r: rate of interest, n: number of times compounded per year, nt: time in years. I will give you the compound interest formula that I found from math books.
What is mean by Compound Interest?
In our previous topic, we defined compound interest as an interest gained added to the original or principal investment or loan.
Related: Albert Einstein Discuss Compound Interest
Compounding Interest Formula Investment
Below image is the formula on how to calculate compound interest. When an investor will decide to reinvest his profits (might a profits in stocks, mutual funds, bonds, business, savings, time and check deposits, any financial products that is earning an interest can use a compound interest), will use the following formula to know the future value of his investment.
Note: If you want to calculate compound interest easily, you may find our latest review about compound interest calculator with inflation rates. We will post some updates and other formulas if we found one.
Example of Compounded Investment
| No. | Contribution | Interest | Future Value | Present Value |
| 1 | 10,000 | 1,500 | 11,500 | 11,500 |
| 2 | 10,000 | 3,225 | 13,225 | 13,225 |
| 3 | 10,000 | 5,208 | 15,208 | 15,208 |
| 4 | 10,000 | 7,490 | 17,490 | 17,490 |
| 5 | 10,000 | 10,113 | 20,113 | 20,113 |
Related: Calculate the Future Value of Your Investment
The table above is the result of compound interest using the formula. The amount of contribution is 10,000 dollars but how come it became 20,113 dollars after 5 years? Well, that’s the magic of compound interest. Take advantage of it especially if you are still young. The more years your money will stay invested, the more chances it will grow. If you liked this example of compound interest formula, please share InvestmentTotal.com with your friends.