compound interest

Definition
Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.The equation for compound interest is: P = C(1+ r/n)ntWhere:    P = future value    C = initial deposit    r = interest rate (expressed as a fraction: eg. 0.06 for 6%)    n = # of times per year interest is compounded    t = number of years invested




compound interest is ...
... part of the
Banking and Lending & Credit subjects.


Related Terms

compounding -
discounted future benefits -  More


compound interest appears in the definitions of these other terms on BusinessDictionary.com

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