Simple & Compound Interest

Calculate simple and compound interest, growth, depreciation and time to double, with the formula and each substitution shown. Try “5000 at 6% compounded monthly for 3 years”.

Try an example:

How the Simple & Compound Interest works

  1. Simple interest: I = Prt. Compound: A = P(1 + r/n)^(nt).
  2. Substitute P = 5000, r = 0.06, n = 12, t = 3.
  3. Compute A, then subtract P to get the interest earned.

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is earned only on the original amount. Compound interest is earned on the amount plus the interest already added.

What is the rule of 72?

Divide 72 by the annual percentage rate to estimate the years needed to double your money.

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