Calculate Compound Interest

Compound interest is calculated using the following formula:

P (1 + R/n) (nt) - P
Here P is principal amount.
R is the annual interest rate.
t is the time the money is invested or borrowed for.
n is the number of times that interest is compounded per unit t, for example if interest is compounded monthly and t is in years then the value of n would be 12. If interest is compounded quarterly and t is in years then the value of n would be 4.

Before writing the java program let’s take an example to calculate the compound interest.

Let's say an amount of $2,000 is deposited into a bank account as a fixed deposit at an annual interest rate of 8%, compounded monthly, the compound interest after 5 years would be:

P = 2000.
R = 8/100 = 0.08 (decimal).
n = 12.
t = 5.

Let's put these values in the formula.

Compound Interest = 2000 (1 + 0.08 / 12) (12 * 5) – 2000 = $979.69

So, the compound interest after 5 years is $979.69.

Java Program to calculate Compound Interest

public class JavaExample {

    public void calculate(int p, int t, double r, int n) {

        double amount = p * Math.pow(1 + (r / n), n * t);

        double cinterest = amount - p;

        System.out.println("Compound Interest after " + t + " years: "+cinterest);

        System.out.println("Amount after " + t + " years: "+amount);

    }

    public static void main(String args[]) {

          JavaExample obj = new JavaExample();

          obj.calculate(2000, 5, .08, 12);

    }

}

Output

Compound Interest after 5 years: 979.6914166032102

Amount after 5 years: 2979.69141660321