compound interest
Definition
Interest computed on the principle amount to which interest earned to-date has been added. Where compound interest is applied, the investment grows exponentially and not linearly as in the case of simple interest. Formula: Principal x {(Annual interest rate ÷ 100) + 1}^number of years. For example, $1,000 at an annual compound interest rate of 10 percent will, in 5 years, be: 1000 x {(10 ÷ 100) + 1}^5 = $1,6105.51.
Mentioned in these definitions
Popular 'Accounting & Auditing' Terms
compound interest in the news
Loading...
This content can be found on the following page:
http://www.businessdictionary.com/definition/compound-interest.html
