Compound Interest Calculator (GCSE Maths)

This compound interest calculator helps GCSE Maths students calculate the final amount of money when interest is added over time. Unlike simple interest, compound interest is calculated on the original amount and on any interest already earned.

Compound interest is commonly used by banks for savings accounts, loans, and investments. Understanding how it works is essential for GCSE exams.

Compound Interest Formula

The compound interest formula is:

Final amount = Principal × (1 + r)^t

Where:

• Principal (P) is the starting amount of money
• r is the interest rate per year written as a decimal
• t is the time in years

Worked example

Question:
£1,000 is invested at a compound interest rate of 5% per year for 3 years. Calculate the final amount.

Step 1: Write down the formula
Final amount = Principal × (1 + r)^t

Step 2: Convert the percentage to a decimal
r = 5% = 0.05

Step 3: Substitute the values
Final amount = 1000 × (1.05)³

Step 4: Calculate
Final amount = 1000 × 1.157625 = 1157.63

Answer:
The final amount after 3 years is £1,157.63.

Use the calculator

Workings

Answer