When you borrow money from a bank, you pay interest. Interest is really a fee charged for borrowing the money, it is a percentage charged on the principle amount for a period of a year – usually. Making it more general, Interest is the "rent" paid to borrow money.
If you want to know how much interest you will earn on your investment or if you want to know the amount you will pay above the cost of the principal amount on a loan or mortgage, you will need to understand how compound interest works. The tool helps you to calculate the payment amount and the total interest of any fixed term loan.
Instructions: To calculate the payment amount and the total interest of any fixed term loan, simply fill in the 3 left-hand cells of the first row and then click on "compute." Use the other three rows to see what effects are produced by changing any one of the loan’s original variables. Use decimal points and numbers only(no commas).