Question

what is compound interest




svs-iqnu-muy​

Answer 1

Answer:

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Compound interest is standard in finance and economics.

Effective interest rates

The effect of earning 20% annual interest on an initial $1,000 investment at various compounding frequencies

Compound interest is contrasted with simple interest, where previously accumulated interest is not added to the principal amount of the current period, so there is no compounding. The simple annual interest rate is the interest amount per period, multiplied by the number of periods per year. The simple annual interest rate is also known as the nominal interest rate (not to be confused with the interest rate not adjusted for inflation, which goes by the same name).

Answer 2

Answer:

Compound interest is the interest calculated on the principal and the interest accumulated on the previous period.

Its formula is : A=p( 1+ r/n)^nt*