Compound interest calculator with steps — annual & monthly examples

Step-by-step compound interest examples: annual compounding, monthly compounding, and solving for principal.

Tool

Use the main compound-interest calculator for interactive calculations: Open compound-interest calculator.

Examples

  1. Annual compounding
    Problem: P = $1,000, r = 5% (0.05), n = 1, t = 3 years
    1. Formula: A = P (1 + r/n)^(n t)
    2. A = 1000 * (1 + 0.05/1)^(1*3) = 1000 * 1.05^3 = 1000 * 1.157625 = 1157.63
    3. Answer: $1,157.63 (rounded)
  2. Monthly compounding
    Problem: P = $1,500, r = 4% (0.04), n = 12, t = 6 years
    1. A = 1500 * (1 + 0.04/12)^(12*6)
    2. Compute factor ≈ (1 + 0.0033333)^72 ≈ 1.2706 → A ≈ 1500 * 1.2706 = 1905.90
    3. Answer: $1,905.90 (approx)
  3. Solve for principal
    Problem: Given A = $2,000, r = 5% (0.05), n = 1, t = 4, find P
    1. Rearrange: P = A / (1 + r/n)^(n t)
    2. P = 2000 / 1.05^4 ≈ 2000 / 1.215506 = 1645.06
    3. Answer: $1,645.06 (approx)