Compound Interest
Compound Interest Meaning:
A type of interest where installments are added to the principal. As a result, installments after the first get larger and larger in value. The opposite of compound interest is simple interest, which is where installments are not added to the principal for the purposes of calculating future installments. This means that installments are always the same value.
A type of interest where installments are added to the principal. As a result, installments after the first get larger and larger in value. The opposite of compound interest is simple interest, which is where installments are not added to the principal for the purposes of calculating future installments. This means that installments are always the same value.
If $100 were to be invested at 10% per annum compound interest, then the first installment would be $10, but the second $11 and the third $12.10, as the principal is increasing each time ($100, $110, $121).