This calculator applies a constant annual rate to the entire balance each year. With one thousand dollars at five percent, year one adds fifty dollars, reaching one thousand fifty. Year two applies five percent to that new balance, adding fifty two dollars and fifty cents. Interest earns interest because the next multiplication includes the previous gain. The source computes principal times one plus rate, raised to the number of years. Its default is one thousand dollars, five percent, and ten years: about one thousand six hundred twenty eight dollars and eighty nine cents. This curve uses the exact annual formula. The model has no contributions, withdrawals, fees, taxes, inflation, or changing returns, and is not a forecast or investment recommendation. Changing principal to two thousand dollars doubles every annual value; it does not change the growth factor. The ten year endpoint becomes three thousand two hundred fifty seven dollars and seventy nine cents. But this page rescales each curve to its own maximum, so the chart can look identical while the amount doubles. Read the numerical summary as well as the drawing. Reset restores defaults and deliberately clears the result.