Calculate compound interest
Compound interest is a financial concept where the interest earned on an investment is added to the initial investment, and in subsequent periods, interest is calculated based on the new total. This leads to exponential growth in the investment over time. It's a crucial concept in finance, banking, and investments. In this article, we'll explore how to calculate compound interest using a program.
Problem Statement
The problem is to calculate compound interest for given principal amount, time (in years), and annual interest rate.
The formula for compound interest is A = P * (1 + r/n)^(nt)
, where:
A
is the final amountP
is the principal amountr
is the annual interest raten
is the number of times the interest is compounded per yeart
is the time in years
Example
Let's consider an example. Suppose you invest $1000 at an annual interest rate of 5% compounded annually. After 3 years, the compound interest can be calculated as follows:
 Principal (
P
) = $1000  Annual Interest Rate (
r
) = 5%  Time (
t
) = 3 years  Compounded annually, so
n
= 1
Using the formula: A = P * (1 + r/n)^(nt)
A = 1000 * (1 + 0.05/1)^(1*3) = 1157.63
The compound interest earned would be $157.63.
Idea to Solve
To solve this problem, we need to create a function that takes the principal amount, time, and rate as input, and then uses the formula to calculate the compound interest. The function can be implemented as follows:
Pseudocode
function compoundInterest(principal, time, rate):
Display principal, time, and rate
amount = principal * (1 + rate / 100)^time
Display calculated amount as compound interest
function main():
compoundInterest(1500, 3, 7.3)
compoundInterest(170.4, 7, 3.4)
Algorithm Explanation
 The
compoundInterest
function takes three parameters:principal
,time
, andrate
.  It displays the provided values for principal, time, and rate.
 It calculates the compound interest using the formula:
amount = principal * (1 + rate / 100)^time
.  The calculated amount is displayed as the compound interest.
Code Solution

1) Program to calculate compound interest in c++
2) Program to calculate compound interest in c
3) Program to calculate compound interest in golang
4) Program to calculate compound interest in node js
5) Program to calculate compound interest in java
6) Program to calculate compound interest in c#
7) Program to calculate compound interest in vb.net
8) Program to calculate compound interest in python
9) Program to calculate compound interest in ruby
10) Program to calculate compound interest in swift
11) Program to calculate compound interest in kotlin
12) Program to calculate compound interest in php
13) Program to calculate compound interest in typescript
Resultant Output Explanation
Running the provided code will give the following output:
Principal : 1500
Time : 3
Rate : 7.3
Compound Interest : 1853.06
Principal : 170.4
Time : 7
Rate : 3.4
Compound Interest : 215.334
Time Complexity
The time complexity of this code is constant, O(1), because the calculations inside the
compoundInterest
function involve basic arithmetic operations that don't depend on the input size. The
function's execution time remains constant regardless of the input values.
Please share your knowledge to improve code and content standard. Also submit your doubts, and test case. We improve by your feedback. We will try to resolve your query as soon as possible.
New Comment