Compound Interest

interest.ts

interface InvestmentPeriod {
  periodNumber: number;
  startingBalance: number;
  additionalInvestment: number;
  periodInterest: number;
  endingBalance: number;
}

interface CompoundResult {
  startingBalance: number;
  endingBalance: number;
  periods: InvestmentPeriod[];
}

interface CompoundingInvestment {
  startingBalance: number;
  numPeriods: number;
  interestRate: number;
  additionalInvestment?: number;
}

// Uses plain "periods" and assumes compounding every period.
// Custom compounding cadence is currently unsupported.
function calculateCompoundInterest({
  startingBalance,
  numPeriods,
  interestRate,
  additionalInvestment
}: CompoundingInvestment): CompoundResult {
  const periods: InvestmentPeriod[] = [];
  let totalBalance = startingBalance;

  for (let i = 0; i < numPeriods; i += 1) {
    // 1. Calculate interest on existing balance
    const periodStartingBalance = totalBalance;
    const periodInterest = totalBalance * interestRate;
    const withInterest = (totalBalance += periodInterest);

    // 2. Calculate the new total balance
    if (additionalInvestment) {
      // If additional investment should happen at each period, add that, too
      totalBalance = withInterest + additionalInvestment;
    } else {
      totalBalance = withInterest;
    }

    periods.push({
      periodNumber: i,
      periodInterest,
      startingBalance: periodStartingBalance,
      additionalInvestment: additionalInvestment || 0,
      endingBalance: totalBalance
    });
  }

  return {
    startingBalance,
    endingBalance: totalBalance,
    periods
  };
}

const result = calculateCompoundInterest({
  startingBalance: 1800,
  interestRate: 0.01, // Daily (%)
  numPeriods: 30, // Days
})

console.log('Investment result', result)