A simple example of a type of investment that can be used with the calculator is a certificate of deposit or CD which is available at most banks. Compound interest is calculated based on the principal interest rate and the time period involvedIt is the addition of interest to the sum of Amount or Principal Amount ie. If interest compounds more often than annually it is difficult to.
P Principle i interest rate in percentage terms n number of compounding.
Total value with compound interest P 1 i n n t P Compound interest P 1 i n n t 1 where. A CD is a low risk investment. How to calculate simple interest. Compound interest is calculated on the principal amount plus any accumulated interest accrued at the start of a period.