2007-09-28 09:40:53 · 8 answers · asked by winniepoooooohhhs032032032the032 3 in Travel ➔ Asia Pacific ➔ Philippines
It is interest which adds to itself over time. For example if you had 100 dollars in the bank and were getting 5% interest, the first year you would get 5 dollars interst and would have 105 dollars, the second year you would get 5.25 interest because the interest would be on 105 not 100 dollars, so then you would have 110.25 dollars and the next year you would get 5.75 interest and so on. It really adds up over time.
2007-09-28 09:48:06 · answer #1 · answered by The Man With Superior Knowledge 4 · 0⤊ 0⤋
Compound interest occurs when interest is earned on a principal sum along with any accumulated interest on that sum. In other ways, you're earning interest on interest. This principal helps your money grow. For example, if you deposit $100 and the interest rate is 5% each year. At the end of year one, you will have $105. At the end of year two, the compound interest is calculated by multiplying 5% by $105. At the end of year two, you would have $110.25. At the end of each year, interest is calculated on the amount in the account.
James C
2007-09-28 16:27:28 · answer #2 · answered by James C 3 · 0⤊ 0⤋
The calculated interest that has accrued during the interest period, a year, or whatever it is, is added to the principal (the original amount). Then the next time interest is calculated, it is calculated on the new figure.
The opposite of compound interest, is simple interest, where the interest is always just calculated on the original amount, without any prior interest having been added.
2007-09-28 09:47:08 · answer #3 · answered by sharmel 6 · 0⤊ 0⤋
Compound interest is when you earn interest on the interest you already made. Like this: Banks pays you interest for money you have deposited there (capital) after an amount of time that capital earns interest, and it is added to the capital, and then it all earns interest and keeps on compounding.
2007-09-28 09:45:37 · answer #4 · answered by PUMA 2 · 0⤊ 0⤋
It means interest is calculate on the principal and the interest added together.
Example. $100 at 6% compound interest.
At one year you have $106
The second year you have $106 x 6% = $112.36 not $112.
2007-09-28 09:45:51 · answer #5 · answered by ignoramus 7 · 1⤊ 0⤋
haahaaay aytenk itz taking a nap in between something and the whole taking a nap happens within an enclosure of some sort. compound interest. yup! that's it!
2007-09-28 10:54:28 · answer #6 · answered by Bungangera of Perya 1 · 1⤊ 0⤋
interest that is compounded over a period of time. daily compound interest is accumulated.
2007-09-28 09:43:39 · answer #7 · answered by Anonymous · 0⤊ 0⤋
somthing you like to do
2007-09-28 09:43:11 · answer #8 · answered by kate j 3 · 0⤊ 0⤋