How Compound Interest Works: Formula, Compounding and Examples
Compound interest differs from simple interest because previously earned interest can become part of the base for later periods. Interest can therefore be earned not only on the original principal but also on interest that has already been capitalized. The longer the term and the more frequently compounding occurs, the more noticeable the difference from a simple-interest model can become. The current LUKIK Compound Interest Calculator uses one initial principal and discrete compounding. Compound-interest formula Formula: A = P × (1 + R / (100 × m))^(m × T) Interest earned: I = A − P where: P ..