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Compound interest earns returns on both the initial principal and previously accumulated interest. This creates exponential growth. Simple interest, by contrast, only grows on the original principal.
Водич корак по корак
- 1A = P(1 + r/n)^(nt) for periodic compounding
- 2A = Pe^(rt) for continuous compounding
- 3Rule of 72: years to double ≈ 72 ÷ annual rate %
Worked Examples
Инпут
$1,000 at 5%, 10 yrs (annual)
Резултат
$1,628.89
Interest: $628.89
Инпут
$1,000 at 5%, 10 yrs (monthly)
Резултат
$1,647.01
$18 more from monthly compounding