Formula and example
How it is calculated
Monthly rate i = annual percentage rate / 1,200; balance = P(1+i)ⁿ + payment × ((1+i)ⁿ−1)/i
Worked example
With no further deposits, €10,000 at a nominal annual rate of 12%, compounded monthly, becomes €11,268.25 after one year. With a €100 contribution at the end of each month, the balance reaches €12,536.50, including €1,336.50 in interest.
Things to check
- Contributions are made at the end of each month. The term is rounded to whole months. Taxes, fees and variable returns are excluded. The entered interest rate is an assumption. At zero interest, the balance is the initial deposit plus all contributions.
- Use one currency consistently. Examples use euros; the calculation works with any currency.