Finance Calculators: The Complete Guide to Compound Interest, Margins & Profit
How money grows, how products are priced, and how to plan your financial future. All finance formulas, worked examples, and free calculators — in one place.
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Compound Interest — The Engine of Wealth
Compound interest is the process of earning returns on your returns. Einstein reportedly called it the "eighth wonder of the world." Whether or not he said it, the math is undeniable.
At 8% annual return compounding monthly, $10,000 becomes $22,196 in 10 years, $49,268 in 20 years, and $109,357 in 30 years. The same principal triples its growth rate from decade 1 to decade 3 — that's compounding at work.
The Rule of 72 gives you a mental shortcut: divide 72 by the annual rate to find doubling time. At 6% it's 12 years; at 9% it's 8 years; at 12% it's 6 years.
→ Use the Compound Interest Calculator · Read the full guide
Simple Interest — When Compounding Doesn't Apply
Simple interest calculates interest on the original principal only, not on accumulated interest. Most short-term loans use simple interest.
On a $10,000 loan at 6% for 3 years, simple interest = $1,800. The same loan with annual compounding = $1,910. The gap widens dramatically over longer periods — $30,000 difference over 40 years on the same $10,000 principal.
→ Use the Simple Interest Calculator · Read the full guide
Profit Margin vs Markup — The Most Confused Pair in Business
Margin and markup both start with the same dollar profit, but they use different denominators. Confusing them leads to systematic underpricing.
A product that costs $60 and sells for $100: margin = 40%, markup = 66.7%. If you tell a supplier you need a "40% margin" but they calculate it as a "40% markup," you're undercharging by a significant amount. Always specify which you mean.
→ Use the Margin Calculator · Read the full guide
Key Finance Benchmarks
| Metric | Healthy Range | Industry |
|---|---|---|
| Gross Margin | 40–70% | SaaS / Software |
| Gross Margin | 25–45% | Retail / E-commerce |
| Net Margin | 15–25% | SaaS |
| Net Margin | 3–8% | Retail |
| Markup | 50–100% | Consumer goods |
| Annual Return | 7–10% | S&P 500 historical avg. |
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Frequently Asked Questions
What is the compound interest formula?
A = P(1 + r/n)^(nt), where P = principal, r = annual rate, n = compounding periods per year, t = time in years. The more frequently interest compounds, the faster your money grows.
What is the Rule of 72?
Divide 72 by the annual interest rate to find how many years it takes to double your money. At 8% annual return: 72 ÷ 8 = 9 years to double. It's a quick mental math shortcut for compound growth.
What is the difference between margin and markup?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. A 50% markup equals a 33% margin. They're often confused because they use the same dollar profit but different denominators.
When should I use simple interest vs compound interest?
Simple interest is used for short-term loans (car loans, personal loans, some bonds). Compound interest applies to savings accounts, mortgages, credit cards, and investments. Compound interest grows — and costs — significantly more over time.
What is a good profit margin?
It depends on the industry. Retail: 2–5% net margin. SaaS: 15–25%. Restaurants: 3–9%. Manufacturing: 5–10%. Gross margins are always higher than net margins. Compare your margins to industry benchmarks, not generic targets.