Compound interest is a concept in finance that describes the interest on a loan or deposit, where interest earned or paid in each period is added to the initial amount, leading to the calculation of interest on the original principal as well as accumulated interest from previous periods.
The compound interest formula is given by:
Key points about compound interest:
1. Exponential Growth: Compound interest leads to exponential growth in the value of an investment over time, as each compounding period builds upon the previous ones.
2. Effect of Compounding Frequency: The more frequently interest is compounded within a year (n), the higher the overall interest earned. As (n) increases, the compounding effect becomes more significant.
3. Long-Term Impact: Compound interest has a substantial impact on long-term investments. Even small changes in the interest rate or compounding frequency can result in significant differences in the future value.
4. Contrast with Simple Interest: Compound interest differs from simple interest, where interest is calculated only on the original principal amount. Compound interest takes into account the interest earned or paid in previous periods.
Understanding compound interest is crucial for both borrowers and investors, as it influences the growth of savings and the cost of borrowing over time. It is a fundamental concept in financial mathematics and is widely used in various financial calculations, including investments, loans, and mortgages.
To design a compound Interest Calculator we will use HTML, CSS. We will use JavaScript to make the calculator fully functional.
Here's the simplified source code of Compound Interest Calculator:
<!DOCTYPE html>
<html lang="en">
<head>
<meta charset="UTF-8">
<meta name="viewport" content="width=device-width, initial-scale=1.0">
<style>
.calculator {
background-color: #fff;
padding: 20px;
border-radius: 8px;
border:2px solid blue;
box-shadow: 0 0 10px black;
margin:20px;
}
label {
display: block;
margin-bottom: 8px;
}
input {
width: 100%;
padding: 8px;
margin-bottom: 16px;
box-sizing: border-box;
}
button {
background-color: #4caf50;
color: #fff;
padding: 10px;
border: none;
border-radius: 4px;
cursor: pointer;
}
button:hover {
background-color: #45a049;
}
#result {
margin-top: 20px;
}
h3 {
margin-bottom: 10px;
}
</style>
<title>Compound Interest Calculator</title>
</head>
<body>
<div class="calculator">
<h2>Compound Interest Calculator</h2>
<label for="principal">Principal Amount:</label>
<input type="number" id="principal" placeholder="Enter principal amount">
<label for="rate">Annual Interest Rate (%):</label>
<input type="number" id="rate" placeholder="Enter annual interest rate">
<label for="time">Time (years):</label>
<input type="number" id="time" placeholder="Enter time in years">
<button onclick="calculate()">Calculate</button>
<div id="result">
<h3>Result:</h3>
<p id="amount">Compound Amount: $ 0.00</p>
<p id="ci77">Compound interst: $ 0.00
</div>
</div>
<script>
function calculate() {
const principal = document.getElementById("principal").value;
const rate = document.getElementById("rate").value;
const time = document.getElementById("time").value;
const compoundAmount = principal * Math.pow(1 + rate / 100, time);
const compoundInterest = compoundAmount - principal;
document.getElementById("amount").textContent = `Compound Amount: $${compoundAmount.toFixed(2)}`;
document.getElementById("ci77").textContent = `Compound Interest: $${compoundInterest.toFixed(2)}`;
}
</script>
</body>
</html>
Preview
Compound Interest Calculator
Result:
Compound Amount: $ 0.00
Compound interst: $ 0.00
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