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Topic: Compound interest

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  Compound interest - Wikipedia, the free encyclopedia
Compound interest, is interest which is added to the original principal.
Yearly compounded interest is considered the norm unless it is specified to be otherwise.
Compound interest was once regarded as the worst kind of usury, and was severely condemned by Roman law, as well as the common laws of many other countries.
en.wikipedia.org /wiki/Compound_interest   (906 words)

 Simple and Compound Interest Rates
Compound interest is calculated each period on the original principal and all interest accumulated during past periods.
The interest earned in each period is added to the principal of the previous period to become the principal for the next period.
You must adjust the interest rate and the number of periods to be consistent with compounding periods.
www.getobjects.com /Components/Finance/TVM/iy.html   (838 words)

 Interest, by Paul Heyne: The Concise Encyclopedia of Economics: Library of Economics and Liberty
Interest is conventionally expressed as a percentage rate for a period of one year.
The standard procedure for calculating compound interest, under which the interest at the end of each year is added to the principal (the amount borrowed), requires borrowers who want to retain command for two years to repay 106.09 percent of the principal, assuming a 3 percent annual rate of interest.
The interest rate is determined by demand and supply: the demand for present control of resources by those who do not have it, and the supply from those who do have control and are willing to surrender it for a price.
www.econlib.org /library/Enc/Interest.html   (1387 words)

 Compound Interest Calculator
The reason it is so difficult to calculate compound interest is that it is not a single calculation but a series of calculations and the numbers change with each calculation.
So far the interest calculations are simple but as we compound it we find that end of the second year we have $110 x 10% or $11 interest added to our $110 giving us a compounded $121.
My result for compound interest was $259.39 while using the calculator would have resulted in $259.37 but the compound interest calculator was also able to simultaneously come up with a result for Quarterly, Monthly and Daily compounding.
www.fintrend.com /ftf/calculators/Compound_Interest_Calculator.asp   (754 words)

 Compound Interest Calculation   (Site not responding. Last check: 2007-10-13)
Starting from an event in 1625 and using different compound interest calculation and also considering three methods, rounded, truncated and rounded up, to post the values, we calculated the final balance in1997 in the "account" established since 1625 and with $24 principal.
Compound interest is calculated more often, and as soon as it's calculated, the interest in added to your account.
When next time to calculate the compound interest, only need to start from the posted value, or only need to consider the decimal to the 2 digits after the decimal point, simply to say, it's the principal for next compound interest calculation.
www.pa.uky.edu /~minli01/cs650/interest.htm   (980 words)

 Compound Interest- Quicken Loans Glossary   (Site not responding. Last check: 2007-10-13)
Compound interest is calculated not only on the initial principal but also on the accumulated interest of prior periods.
In other words, compound interest is calculated over the total amount owed, including interest that has been added to the debt.
Borrowers will often experience compounding interest during negative amortization when the principal amount of your loan actually increases because the monthly payments are lower than the full amount of interest owed.
www.quickenloans.com /help/mortgage-glossary/40/Compound-Interest.html   (152 words)

 Compound interest in international disputes Law and Policy in International Business - Find Articles
In today's economic world, compound interest, and not simple interest, is the norm in both third-party financing and investment vehicles.
My study finds a divergent practice concerning awards of compound interest; some prohibit it, others allow it in certain circumstances, and a number of statutes are silent on the issue.
Awarding compound interest in these circumstances would be consistent with the laws of many countries and would better achieve the goals of awarding interest than does the traditional practice of granting only simple interest.
www.findarticles.com /p/articles/mi_qa3791/is_200301/ai_n9236017   (554 words)

Compounding is the process of earning interest not only on your original deposit, but also on the interest it earns as it stays in the bank.
Then the interest paid at the end of each six month period is one-half of 5% of the balance at the beginning of the period.
For example, if you invest your money at a 7% interest rate and simply compound the interest earned once per year, after 10 years instead of having earned interest worth 70% of your original principal, you have earned interest worth 96.71% of your original principal.
www.eduworks.com /Documents/Workshops/EdMedia1998/class/compound.htm   (819 words)

 Interest - Wikipedia, the free encyclopedia
Compound interest: In order to solve these three problems, there is a convention that interest rates will be disclosed as if the term is one year and the compounding is yearly.
In a loan with interest calculated per the Rule of 78, the total interest over the life of the loan is calculated as either simple or compound interest and amounts to the same as either of the above methods.
Interest rates are generally determined by the market, but government intervention - usually by a central bank- may strongly influence short-term interest rates, and is used as the main tool of monetary policy.
en.wikipedia.org /wiki/Interest   (1795 words)

Because the interest is added to the account (the alternative would be to mail the interest to the customer), the interest itself earns interest during the next time period for computing interest.
In words, the balance at the end of a new compounding period is the balance at the end of the preceding period plus the interest that older balance earned during the compounding period.
If T is not a multiple of the compounding period, the conclusion depends strongly on the account's policies on withdrawals in the middle of a compounding period.
www.math.hawaii.edu /~ramsey/CompoundInterest.html   (1286 words)

 Compound interest - 1
'Compound interest' calculations apply to investments where the amount of interest is calculated on the present balance of the account.
The compound interest formula calculates the value of a compound interest investment after 'n' interest periods.
A yearly interest rate must be divided by the number of payments per year.
www.teacherschoice.com.au /Maths_Library/Money/compound_interest.htm   (760 words)

 Interest Compounding
When money is placed on deposit to earn interest, the interest can be paid out periodically as it is earned, or it can be left on deposit.
With it, interest is earned on both the initial deposit and on any interest that has already been earned but left on deposit—interest is earned on interest.
The limiting case of this is called continuous compounding where interest is credited on a continuous basis.
www.riskglossary.com /articles/compounding.htm   (601 words)

 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)
www.investorwords.com /1013/compound_interest.html   (195 words)

 Interest Tutorial
Because the interest payments are made more frequently, old interest begins accumulating new interest sooner under compound interest than under simple interest.
Interest compounded once per year is the same as simple interest.
Continuous interest, in contrast, is what results from compound interest when the number of compounding intervals approaches infinity.
www.cs.utah.edu /~zachary/isp/applets/Interest/Interest.html   (834 words)

 Interest and Exponential Growth Table   (Site not responding. Last check: 2007-10-13)
When interest is only compounded once per year (n=1), the equation simplifies to:
As is shown, the method of compounding has little effect.
While the person is repaying the loan, interest is accumulating at an annual percentage rate of r, and this interest is compounded n times a year (along with each payment).
www.math.com /tables/general/interest.htm   (170 words)

 Compound Interest   (Site not responding. Last check: 2007-10-13)
Interest is the measure of value of money when in use, usually expressed as annual percentage rate, or interest rate.
Interest from invested capital when reinvested will in turn become a part of capital and earn interest, such a process is called compounding.
An example: assuming that you invest $1500 at an annual interest rate of 5% compounded annually for n=20 years.
tfsfrd.tamu.edu /tdss/Basic/cid.htm   (371 words)

 Compound Interest and Your Return - Financial Calculators from Dinkytown.net
Compound Interest and Your Return-->How interest is calculated can greatly affect your savings.
The more often interest is compounded, or added to your account, the more you earn.
From January 1970 to December 2005, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year.
www.dinkytown.net /java/CompoundInterest.html   (465 words)

 MoneyTalk$ Online! - The Eighth Wonder of the World
ften we are told of the wonderful power of compound interest (earning interest on both principal and previous interest).
If the factory is going to return the original $10,000 investment PLUS the compound interest, the money supply would have to be increased by at least $66,122.52 or even more if the shoe factory is going to have a profit.
By borrowing the $66,122.52 needed to pay the investor 7% compound interest, the total debt drawing interest at some bank would be $76,122.52.
www.wealthmoney.org /wonder.html   (649 words)

 Fool.com: Compound Interest [Ask FoolU]
The adventurous astronaut sister, on the other hand, puts her $1,000 in an account that returns 5 percent compound interest.
This means that she gets interest not only on her original $1,000, but on the interest that is added to it as well.
The power of compound interest over time is simply staggering -- and the higher the rate of return, the faster your investment grows.
www.fool.com /foolu/askfoolu/1999/askfoolu990915.htm   (600 words)

 What is compound interest? (via CobWeb/3.1 planetlab2.netlab.uky.edu)   (Site not responding. Last check: 2007-10-13)
Compound interest occurs when interest is earned on a principal sum along with any accumulated interest on that sum.
At the end of year two, the compound interest is calculated by multiplying 5% by $105.
At the end of each year, interest is calculated on the amount in the account.
www.missourifamilies.org.cob-web.org:8888 /quick/financeqa/finqa21.htm   (116 words)

 Simple vs. Compound Interest (via CobWeb/3.1 planetlab2.netlab.uky.edu)   (Site not responding. Last check: 2007-10-13)
The interest rate is applied only to the original principal amount in computing the amount of interest.
The interest rate is applied to the original principle and any accumulated interest.
All other things being equal, compound interest has a larger effect as the time period increases and as the interest rate increases.
www.datalife.com.cob-web.org:8888 /mall/pages/examples/EXMP_INT.HTM   (83 words)

 Understanding and Controlling Your Finances: Basic compound Intrest Calculator
Enter the amount you plan to add to your account each week, and the expected interest rate.
Interest Rate - Enter the interest rate you expect to earn.
To give you two ideas, current CD rates run between 5% and 6%, while the stock market has returned an average of 10% or so for many years.
www.bygpub.com /finance/InterestCalc.htm   (279 words)

 Mathematics of Money With Applications
where i = r/m is the interest per compounding period and n = mt is the number of compounding periods.
This is the interest rate that would give the same yield if compounded only once per year.
Thus, we get an effective interest rate of 10.25%, since the compounding makes the CD paying 9.8% compounded monthly really pay 10.25% interest over the course of the year.
home.ubalt.edu /ntsbarsh/Business-stat/otherapplets/CompoundCal.htm   (612 words)

 The Power of Compound Interest
A recent Australian survey found some 54% of mortgage statements contain errors, the vast majority of which are in the banks' favour.
Compound interest is a fundamental component in the laws of money.
Compounding interest simply refers to the fact that the interest you receive will be calculated not only on the principal amount that you invested, but also upon prior interest amounts added to your investment.
www.financiallyfree.com.au /compound_interest.htm   (1070 words)

 Math Forum - Ask Dr. Math Archives: High School Interest   (Site not responding. Last check: 2007-10-13)
What is the interest amount for the period from Sept. 05, 2001 to Dec. 04, 2001, at 5% interest, compounded daily, on principal of $356,964.15?
Since the amount of principal and interest per payment both vary over the life of the loan, I'm not sure how to come up with that amount.
I need a compound interest formula with repayments, such as in a bank situation.
mathforum.org /library/drmath/sets/high_interest.html   (907 words)

 XL: How to Calculate Compound Interest
Compound interest is the amount that a dollar invested now will be worth in a given number of periods at a given compounded interest rate per period.
The account pays 8 percent interest and this interest is compounded annually.
This is the amount your original investment of $1000.00 is worth after three investment periods at 8 percent compound interest.
support.microsoft.com /?kbid=141695   (465 words)

 Algebra versus Arithmetic 14: Compound Interest Formula
PS: This chapters uses the compound interest formula to introduce the idea of using formulas directly and indirectly, that is forwards and backwards, and also to introduce and compare arithmetic and algebraic solutions to problems.
In a compound interest account, a bank adds the interest to your account at the end of a period.
Again, compounded means the interest is reinvested at the end of each period with no other deposits or withdrawals, Each interest payment deposited in your account then earns interest (rent from the bank) in the following periods.
whyslopes.com /etc/ThreeSkillsForAlgebra/ch14.html   (864 words)

 Rule Of 72 - Compound Interest and Financial Success Rule
Compound interest should be one of your financial success tools.
Compound interest is interest that accrues based on the total balance of principle and accumulated interest.
Compound interest is a powerful tool for achieving financial success.
www.ruleof72.net   (284 words)

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