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Compound interest is the process where interest is calculated on both the principal and the accumulated interest over previous periods. Unlike simple interest, compound interest allows your money to grow faster due to interest-on-interest effect. It is widely used in savings accounts, fixed deposits, investments, and loans.
The formula for compound interest is:
A = P (1 + r/n)^(n*t)
Where P is the principal amount, r is the annual interest rate (in decimal), n is the number of times interest is compounded per year, and t is the time period in years. The final amount A includes both principal and interest. The compound interest can be calculated by subtracting the principal from the final amount.
Using this calculator, you can quickly determine the total amount and compound interest for any investment or loan. This helps in effective financial planning, comparing investment options, and understanding how different compounding frequencies impact returns. Whether you are an investor, student, or professional, this tool provides accurate and instant calculations for all compound interest needs.