Compound interest is a type of interest that is calculated on the initial principal and also on the accumulated interest of previous periods. It is a powerful tool for growing wealth over time, as the interest earned in each period is added to the principal, so that the balance grows faster than with simple interest.
A compound interest calculator is a tool used to calculate the amount of interest earned on an investment over a period of time. It takes into account the principal amount, the interest rate, and the number of compounding periods to calculate the total amount of interest earned.
Compound interest is calculated using the following formula: Compound Interest = P (1 + r/n) ^ (nt) – P Where: P = Principal Amount r = Annual Interest Rate n = Number of Times Interest is Compounded per Year t = Number of Years
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