Compound interest is interest calculated on the initial principal amount as well as on the accumulated interest from previous periods. It allows interest to grow exponentially over time, rather than linearly as with simple interest. The effective annual rate takes into account the compounding frequency to determine the actual annualized rate of return when interest is compounded more than once per year.
Compound interest is interest calculated on the initial principal amount as well as on the accumulated interest from previous periods. It allows interest to grow exponentially over time, rather than linearly as with simple interest. The effective annual rate takes into account the compounding frequency to determine the actual annualized rate of return when interest is compounded more than once per year.
Compound interest is interest calculated on the initial principal amount as well as on the accumulated interest from previous periods. It allows interest to grow exponentially over time, rather than linearly as with simple interest. The effective annual rate takes into account the compounding frequency to determine the actual annualized rate of return when interest is compounded more than once per year.