Python Program to Find Compound Interest

Compound interest is calculated using the formula:

A = P * (1 + r/n)^(nt)
    

where:

• A is the amount of money accumulated after n years, including interest.
• P is the principal amount (the initial amount of money).
• r is the annual interest rate (in decimal).
• n is the number of times that interest is compounded per year.
• t is the time the money is invested for in years.

Python Code Example

# Function to calculate compound interest
def calculate_compound_interest(principal, rate, times_compounded, years):
    # Convert annual rate from percentage to decimal
    rate_decimal = rate / 100
    
    # Calculate compound interest
    amount = principal * (1 + rate_decimal / times_compounded) ** (times_compounded * years)
    return amount

# Example usage
principal = 1000  # Initial amount
annual_rate = 5   # Annual interest rate in percentage
times_compounded = 4  # Quarterly compounding
years = 10  # Investment duration in years

# Calculate the final amount
final_amount = calculate_compound_interest(principal, annual_rate, times_compounded, years)

# Output the result
print(f"The amount after {years} years is: ${final_amount:.2f}")
    

Explanation

In this code:

• The calculate_compound_interest function takes the principal, annual interest rate, number of times compounded per year, and number of years as parameters.
• The annual interest rate is converted from a percentage to a decimal.
• The compound interest is calculated using the formula and returned.
• In the example, we calculate the amount for a principal of $1000 with an annual interest rate of 5%, compounded quarterly, over 10 years.

Conclusion

The provided Python program effectively calculates compound interest using a straightforward formula. You can adjust the principal, rate, compounding frequency, and duration to fit different scenarios.