How to calculate compound interest Compound interest is calculated using the compound interest formula. To calculate your future value, multiply your initial balance by one plus the annual interest rate raised to the power of the number of compound periods. Subtract the initial balance if you want to know the total interest earned. What will $10,000 be worth in 20 years? $10,000 invested at a fixed 5% yearly interest rate, compounded yearly, will grow to $26,532.98 after 20 years.
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