Library

Compound Interest Observatory

Level 1 of 10 · See how compounding differs from simple interest over time.

One year, one orbit

$1,000 at 10% for one year, compounded once a year. Deposit $1,000 · 10% a year · compounded yearly.

Simple interest

Principal
$1,000
Interest so far
$0
Balance
$1,000

Compound interest

Principal
$1,000
Interest so far
$0
Balance
$1,000

Telescope set to year 0 of 1.

What is the compound balance after 1 year?

Compound balance = P × (1 + r/n)^(n×t), where P is the deposit, r the stated annual rate, n the compounding periods a year and t the years. Rates are hypothetical and fixed — real returns are never guaranteed.