Interest Calculator
Work out what a principal grows to with simple or compound interest, the interest earned and the effective annual yield.
Money & FinanceResult
Final amount
$6,416.79
- Interest earned
- $1,416.79
- Effective annual yield
- 5.12%
- Term
- 5 years
How is it calculated?
Enter the principal, the annual interest rate and the term (months or years). Choose whether the interest is simple or compound and, for compound, how often it is added to the principal. The tool shows the final amount, the interest earned and the effective annual yield.
Formula
Simple: Amount = Principal × (1 + Rate × Years) Compound: Amount = Principal × (1 + Rate ÷ n)^(n × Years) Effective yield = (1 + Rate ÷ n)^n − 1
Example
Principal: $10,000 · Annual interest rate: 40% · Term: 12 · Term in: Months · Interest type: Compound interest · Compounded: Monthly → Final amount: $14,821.26
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Frequently asked questions
What is the difference between simple and compound interest?
With simple interest the interest is always earned on the original principal. With compound interest the interest already earned is added to the principal and earns interest itself; the gap widens the longer the term.
Are taxes included?
No. The result is gross interest. Deduct any tax withheld on savings income yourself.
What is the effective annual yield?
The real yearly return when interest is added more than once a year, which comes out higher than the nominal rate. 40% compounded monthly is about 48.2% a year.
Can I enter the term in months?
Yes. Choose “Months” and the tool converts it to years; 18 months is 1.5 years.