Compounding interest occurs when interest is added to the principal after each time it is calculated.
The principal is the initial amount on which interest will be calculated.
The interest rate is percentage that will be added over the course of one period.
The number of compoundings per period is the number of times a portion of the interest will be calculated and added per period.
The number of periods is how many times the total interest will be calculated.
Example: If your initial investment is $1,000 at an interest rate of 7% compounded monthly over five years then you would enter the following values:
Principal: 1000
Interest Rate: 7
Number of Compoundings: 12
Number of Periods: 5