We all like the thought of earning interest on our savings and investments. Equally, we all hate having to pay interest on loans and debts. With some deft mathematical footwork it's possible to cancel out the interest on your debts by using the compound interest that accumulates on your savings. Let me ask you a question. Do you really understand what compound interest means and how it works? Most importantly: do you know how it can benefit you?
compound interest essay
Compound Interest and Rate Essay - Words | Bartleby
Please join StudyMode to read the full document. Interest is usually compounded which means interest is charged or given on the interest and the principal. P is called the present value. Interest is really a fee charged for borrowing the money, it is a percentage charged on the principle amount for a period of a year - usually. If you want to know how much interest you will earn on your investment or if you want to know how much you will pay above the cost of the principal amount on a loan or mortgage, you will need to understand how compound interest works.
Interest is a fee for borrowing money. When people invest their money, the bank pays them interest because the bank has, in effect, borrowed money from the depositor. Conversely, when people take a loan or mortgage , they pay interest to the bank. In most cases, this is compound interest , which means the interest is paid not only on the amount of the original deposit, but also on any accrued interest. In contrast, simple interest is only paid on the original deposit.
Please join StudyMode to read the full document. Interest is usually compounded which means interest is charged or given on the interest and the principal. P is called the present value. Remember, I do not believe in magic!!!