2007-02-09 07:17:27 · 4 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Compound interest is computed on both the principal and the accumulated interest. A person who borrows $1,000 for two years at 10 percent interest that is compounded annually would pay a total of $210 in interest. The amount of interest would be $100 (10 percent of $1,000) at the end of the first year and $110 (10 percent of $1,100) at the end of the second year. Thus, a two-year $1,000 loan would cost $10 more at 10 percent annually compounded interest than it would at 10 percent simple interest. Interest may also be compounded at other intervals, including daily, monthly, quarterly, and semiannually.
2007-02-09 07:26:51 · answer #1 · answered by Anonymous · 0⤊ 0⤋
because on compound interest interest is gained on the interest plus the principal every time total amount is recalculated
2007-02-09 15:21:31 · answer #2 · answered by kevin_in_oc 1 · 0⤊ 0⤋
What's so good about compound interest? The money is working for you, so you don't have to work for the money. I like getting money wiithout having to work for it.
2007-02-09 17:02:44 · answer #3 · answered by nickfromct 3 · 0⤊ 0⤋
You get paid interest this month on the interest you were paid last month--compounding,,;-)=
2007-02-09 15:26:42 · answer #4 · answered by Jcontrols 6 · 0⤊ 0⤋