Question

create a problem from day to day life to find the compound interest​

Answer 1

Answer:

Let’s say that you’ve invested in an asset which returns, on average, 7% each year, and let’s say you invest $10,000 the first year.

After one year, you have $10,000 of your original investment, and $700 of growth.

While yes, $700 would be great to take out and spend, you decide to leave it in because now, that $700 is going to grow at 7% in addition to the rest of your $10,000 original investment.

After the second year, you now have $11,449 ($10,000 + $700 + $700 + $700 * 7%)

Again, you decide to leave it in, since now, both $700s are going to grow in addition to your original investment.

Over 30 years, the growth is quite large: your original $10,000 investment is worth $76,123!

After 1 year, you barely had anything more than your original investment. But after 30 years, you had over 7 times your initial investment! That’s the power of compounding.

Hope this helps you

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