How to Calculate Interest

Compound Interest Formula

Compound interest is calculated using the starting principal and includes the interest accumulated.

Looking for a Compound Interest Equation? Use this formula:

FutureValue = StartingValue(r/n +)nt

• FutureValue = future value of the investment
• StartingValue = Starting deposit
• r = interest rate
• n = times annually interest is compunded
• t = years of the investment

Simple Interest Formula

Simple Interest varies from Compound Interest by only adding interest to the Principal. All interest accured is withdrawn.

Looking for a Simple Interest Equation? Use this formula:

Interest = Principal * Rate * NumberOfYears

• Interest = total amount of interest
• Principal = The starting amount
• InterestRate = Interest rate charged each year in decimals
• NumberOfYears = is the time in years of the loan.