What is Compound Interest?

Compound Interest (CI) is the interest calculated on both the initial principal and the accumulated interest from previous periods. It is calculated using the formula:

CI = P � (1 + R/N) ^ (N � T) - P
Where:

• P: Principal loan amount
• R: Annual interest rate (decimal)
• N: Number of compounding periods per year
• T: Time in years

This calculator shows both the interest earned and the total amount after compounding.