Compound Interest
Interest that is calculated both on the initial principal and accumulated interests of previous period. It refers that interest is calculated on the original principal plus amount of unpaid interest added on the principal.
Compound Interest is calculated as:
P = C(1+ r/n)nt
P = Future value
C = Initial deposit
r = Interest rate (expressed in decimals)
n = Number of times per year interest in compounded
t = Years invested
The more frequently interest is compounded, the higher interest will be.
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