How to Calculate Compound Interest Using JavaScript

Compound Interest Formula

You can calculate compound interest easily in JavaScript.

The full formula for compound interest is:

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

Where:

A=answer

P=initial balance (principal)

r=interest rate

n=number of times applied per unit time

t=number of units of time

We'll assume the interest compounds yearly (so n=1).

This gives us a simplified formula for compound interest, which looks like:

A=P*(1+r)^t

Formula Implementation Using a For Loop

Here is an implementation of that formula, written to be simple and clear, showing the principal, amount, rate, and calculation by year.


let amount;
let rate = .05;
let principal = 1000.0;

for ( let year = 1; year <= 10; year++ )
{  
   amount = principal * Math.pow(1 + rate, year);
   console.log(year, amount);
}

Here is the same formula, where years are filled in an array from 0 through 10 (so fillrange, the array, looks like [0,1,2,3,4,5,6,7,8,9]).


const fillrange=[...Array(11).keys()];

for (const i in fillrange) {
   amount = principal * Math.pow(1 + rate, i);
   console.log(i, amount);
}

Alternative Implementations

Here is a very short version of finding the compound interest rate using map.


const result=fillrange.map((x)=>principal*Math.pow(1+rate,x));
console.log(result);

Here is another way to calculate compound interest, using the reduce method.


const amount_final=fillrange.reduce((previous,current)=>previous*(1+rate),principal);
console.log(amount_final);