Compound Interest

Important Concepts of Compound Interest

  1. The money is said to be compounded, if the interest at the end of a year or some other fixed period that has fallen due is not paid to the lender but is added to the principal so that the amount at the end of this period becomes the principal for the next period. This process is repeated until the amount for the last period has been obtained.
  2. Some entities such as population, the height of a tree, weight, and height of a child, increase in magnitude over a period of time. The function of increase is called growth. Growth per unit of time is called the rate of growth.

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