Difference between revisions of "Compounding interest"

Latest revision as of 00:24, August 30, 2008

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-'''Compounding interest''' is when interest earned adds to the principle for any future calculation of interest received.  So a bank account that is compounded yearly that pays 4% interest and has $1,000 in the account would see the total value in the account be $1,040 after the first year ($1,000 * .04 = $40 interest earned), but it would increase to $1081.60 after the second year ($1,040 * .04 = $41.60 interest earned).  As more time goes by, the amount of interest received will continue to increase.
+#REDIRECT [[Interest#Compound interest]]
-== See Also ==
-* [[Simple interest]]
-[[Category: Economics]]