There are two types of bank compound interest calculation formulas:

1. One-time payment compound interest calculation formula. F=P(1i)^n.

2. Compound interest calculation formula for multiple equal payments. F=A((1 i)^n-1)÷i.

F is the final sum of principal and interest, P is the initial principal, A is the equivalent value, i is the interest rate, and n is the number of periods for interest calculation.

Compound rate means that the interest is settled once every year (settled in the form of simple interest rate), and then the principal and interest are summed up as the principal for the next year. When the interest is settled next year, Use this number as your principal. Compound interest earns more interest than simple interest.

Calculation formula

Einstein said: Compound interest is the eighth wonder of the world. The greatest power in the world is not the atomic bomb, but compound interest! I believe many people have heard this sentence, but in the era of Internet information explosion, this sentence is also one of the many famous quotes that are often passed down. However, the admiration of compound interest among many financial workers is unquestionable.

The calculation of compound interest is to calculate the principal and the interest generated together, which means that the interest is beneficial.

The characteristic of compound interest calculation is that the sum of the principal and interest of the previous period is regarded as the principal of the next period, and the amount of the principal of each period is different during calculation. The calculation formula of compound interest is: I=(1 i)^n

Present value of compound interest

The present value of compound interest refers to the need to achieve a specific future value when calculating compound interest. The amount of capital, the principal that must be invested. The so-called compound interest, also known as interest plus interest, refers to the method of making a new round of investment with interest after a deposit or investment has received a return.

Compound interest future value

Compound interest future value means that after the principal earns interest within the agreed period, the interest is added to the principal and then the interest is calculated, and the interest is rolled over period by period to the end of the agreed period. The sum of principal.

For example: the principal is 50,000 yuan, the interest rate or return on investment is 3, and the investment period is 30 years. Then, the interest income obtained after 30 years, calculated according to the compound interest calculation formula, is: 50,000× (1 3)^30.

Since inflation rate and interest rate are closely related, just like the two sides of a coin, the formula for calculating the future value of compound interest can also be used to calculate the actual value of a specific fund in different years. Simply replace the interest rate in the formula with the inflation rate.

For example: If you want to raise a pension of 3 million yuan in 30 years, assuming the average annual rate of return is 3, then the principal that must be invested is 500000×(1 3)^30.

The interest is settled once every year (settled at a simple interest rate), and then the principal and interest are added together as the principal for the next year. This number will be used as the principal when settling interest next year. Compound interest earns more interest than simple interest.

Interest is the fee for using currency within a certain period of time, which refers to the remuneration that currency holders (creditors) receive from borrowers (debtors) for lending currency or currency capital. Including interest on deposits, loans and various bonds. Under capitalism, the source of interest is the surplus value created by wage workers. The essence of interest is a special transformation form of surplus value and is a part of profit.