Compound interest
Growth where interest is added to the balance and then earns interest itself.
With compound interest the balance after t years is P × (1 + r ÷ n) to the power n × t, where n is how many times a year interest is added. 2,000 at 6% compounded quarterly for 5 years: 2,000 × 1.015 to the power 20 = 2,693.71.
Finance calculators do exactly this with their TVM keys. Either way works.
Classic Graphing 84
Start on the main screen: Press 2nd then mode (QUIT) to get back to the home screen. Pressing clear on a menu also backs out of it.
Type the formula, using the caret key for "to the power" and brackets around the whole exponent.
2000×(1+.06÷4)^(4×5)enter
You should see2693.710013
Classic Graphing 84 key reference · Classic Graphing 84 manual
Natural Scientific 991
Start on the main screen: Press MENU, then 1 (Calculate) to return to the main calculation screen. AC clears the line you are on.
Type the formula. After the power key, type the exponent 20 and press the right arrow to leave the exponent.
2000×(1+.06÷4)x20▶=
You should see2693.710013
Natural Scientific 991 key reference · Natural Scientific 991 manual
Classic Financial II
Start on the main screen: Press 2ND then CPT (QUIT) to leave a worksheet and return to the plain calculator. ON/OFF also drops back to the standard screen and clears an error.
Set 4 periods per year (type 4 on the P/Y screen), then leave it.
2NDP/YI/Y4ENTER2NDQUITCPTN is 20 quarters. Enter the 6% yearly rate, the money you put in as a negative PV, and no payments.
20N6I/Y2000+/-PV0PMTCompute FV.
CPTFV
You should seeFV= 2,693.71
Classic Financial II key reference · Classic Financial II manual
RPN Financial 12
Start on the main screen: There is no menu to leave: the display always shows the X register. Press f then R/S (P/R) to leave program mode, and clear a pending prefix by pressing ON.
Work with one period per quarter: 20 quarters at 1.5% each.
20n1.5iPut in 2,000 as a negative PV with no payments, then ask for FV.
2000CHSPV0PMTFV
You should see2,693.71
Tips
- More frequent compounding gives slightly more. Monthly compounding of the same 6% a year would give a little more than quarterly.
Related guides
- Simple interestInterest on a fixed amount that does not itself earn interest: I = P × r × t.
- Convert a nominal rate to an effective rateFind the real yearly rate when interest is added more than once a year.
- Exponential growthFind what a quantity grows to at a fixed percentage rate, and how long it takes to double.