Tuesday, April 19, 2011

Compound Interest Calculator

Have you ever wanted to do a compound interest calculation but don't have a calculator in front of you? Here is a nifty way of doing it with Google.

A more detailed description of the below formula is provided in the Wikipedia link above however here is simple example which takes US$10,000 which is compounded at 5% annual interest 2 times per year for 20 years.


Each number is as follows, the bolded number represented the item being described:
10000(1+(.05/2))^(2*20) = US$10,000.00
10000(1+(.05/2))^(2*20) = Fixed value (do not change)
10000(1+(.05/2))^(2*20) = 5% interest rate converted to decimal
10000(1+(.05/2))^(2*20) = Numbers of times the interest is compounded per year
10000(1+(.05/2))^(2*20) = Number of years the money will have to grow