This periodic compound interest calculator estimates either the accrued amount (principal + interest earned), principal invested, rate of return or term/no. of periods by using the compound interest formula AC = P(1+r)^t. There is in more information on this topic below the application.
How does this periodic compound interest calculator work?
This is a simple tool that allows you solve any financial problem related to any variable from the compound interest formula per period. The figures that should be provided depend on the variable to be solved as explained below.
The algorithm behind this periodic compound interest calculator applies by case the following equations:

In case you choose to forecast the Accrued amount (Principal + Interest) (AC), then you have to provide the principal (P), rate per period (r) and the term as number of periods (t)
AC = P(1 + r)^{t}

In case you choose to determine the Principal amount (P), then you have to input the accrued amount (AC), rate per period (r) and the term as number of periods (t)
P = AC / (1 + r)^{t}

In case you select to estimate the Interest rate / rate of return per period (r) in percentage format, then you have to know the accrued amount (AC), principal (p) and the term as number of periods (t)
r = ((AC/P)^{1/t} – 1)*100

In case you want to calculate the number of periods (t), then you have to input the accrued amount (AC), principal (p) and the rate per period (r)
t = ln(AC/P) / ln(1 + r) = ( ln(AC)  ln(P) ) / ln(1 + r)
Example of calculations
Scenario 1: In case you want to know how much you will end up in your savings account after a deposit of $100,000 over the next 2 years with an yearly effective interest rate of 3.55% then choose the first option from the list and you will get these figures:
■ Equation applied: AC = P(1 + r)^{t}
■ Accrued amount (principal + interest) (AC) = $107,226.03
Scenario 2: In case a bank presents you an offer with these terms: you deposit $10,000 for 5 years and they will ensure a ending balance of $14,500, then by selecting the 3rd option from this periodic compound interest calculator you will get the following results:
■ Equation: r = ((AC/P)^{1/t} – 1)*100
■ Rate of return / interest rate per period (r) = 7.71%
Scenario 3: In case a bank offers you the possibility to deposit $100,000 with an annual interest rate of 4.5%. Then if you want to achieve a savings goal of $150,000 let's figure out how many years will you need to keep your deposit. By choosing the 4th option you will get the following value:
■ Formula used: t = ln(AC/P) / ln(1 + r)
■ Rate of return / interest rate per period (r) = 9.21 years
20 Mar, 2015  0 comments
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