Interest Rate Accumulation Calculator

The Interest Rate Accumulation Calculator helps estimate how much your investment will grow over time with compound interest and regular contributions. It’s ideal for long-term savings, investment planning, or retirement forecasting.

What Does This Calculator Do?

This calculator computes:

• Future Value of an investment
• Interest Earned
• Total Contributions
• Effective Annual Rate

It considers compound interest and recurring contributions based on user-defined frequencies (monthly, quarterly, yearly, etc.).

Key Formulas

1. Periodic Interest Rate

We convert the annual rate to the rate per compounding period.

$r=\frac{R}{n}$

• $r$: periodic interest rate
• $R$: annual interest rate (in decimal, i.e., 5% = 0.05)
• $n$: compounding periods per year

2. Total Number of Periods

$t=Y\times n$

• $t$: total periods
• $Y$: investment duration in years
• $n$: compounding frequency per year

3. Future Value of Principal

$F{V}_p=P\times (1+r{)}^t$

• $FVp\text{}$: future value from initial principal
• $P$: initial principal
• $r$: periodic rate
• $t$: total periods

4. Future Value of Regular Contributions

$F{V}_c=C\times \left(\frac{(1+r{)}^t-1}{r}\right)$

• $FVc$​: future value from contributions
• $C$: contribution per period
• $r$: periodic interest rate
• $t$: number of periods

5. Total Future Value

$FV=F{V}_p+F{V}_c$

6. Total Contributions

$TC=P+(C_f\times Y)$

• Cf​: total contributions per year = $\text{regular contribution}\times \text{frequency}$

7. Interest Earned

$I=FV-TC$

Example Calculation

Let’s assume:

• Initial Principal: $10,000
• Annual Interest Rate: 6%
• Compounding Frequency: Monthly (12 times/year)
• Investment Period: 10 years
• Regular Contribution: $200
• Contribution Frequency: Monthly

Step 1: Calculate periodic rate and total periods

$r=\frac{6}{100\times 12}=0.005$

and

$t=10\times 12=120$

Step 2: Future value of principal

$F{V}_p=10000\times (1+0.005{)}^{120}=10000\times 1.8194=18194.00$

Step 3: Future value of contributions

$F{V}_c=200\times \left(\frac{(1+0.005{)}^{120}-1}{0.005}\right)=200\times 118.393=23678.85$

Step 4: Total Future Value

$FV=18194.00+23678.85=41872.85$

Step 5: Total Contributions

$TC=10000+(200\times 12\times 10)=10000+24000=34000$

Step 6: Interest Earned

$I=41872.85-34000=7872.85$

Conclusion

The Interest Rate Accumulation Calculator gives a clear estimate of how your savings or investments grow over time. Whether you’re planning for retirement, a major purchase, or building wealth, it helps you stay financially informed and on track.