--%>

Explain compound interest

Explain compound interest? Compare compound interest to discounting.

Compound interest takes place while interest is earned on interest and on the original principal of an investment. Discounting is the opposite process of compounding. Compound interest is reason of the value of a starting amount to rise at an increasing rate. Discounting causes the present value of a future amount to reduce at an increasing rate.

   Related Questions in Finance Basics

  • Q : Problem of time lags in enacting and

    Normal 0 false false

  • Q : Define Budget Budget : It is a plan of

    Budget: It is a plan of operation stated in terms of financial or other resource necessities for a particular period of time.

  • Q : Summer Co. is expected to pay a

    Summer Co. is expected to pay a dividend or $4.00 per share out of earnings of $7.50 per share. If the required rate of return on the stock is 15% and dividends are growing at a current rate of 10% per year, calculate the present value of the growth opportunity for the stock (PVGO)

  • Q : Time Value of Money Problems on a Texas

    TVM Appendix B: Using the TI-83/84  Time Value of Money Problems on a Texas Instruments TI-831 Before you start:  To calculate problems on a TI-83, you have to go into the applications menu, the blue  “APPS” key on the calculator. Several

  • Q : Describe annuity Normal 0 false false

    Normal 0 false false

  • Q : Legal factors to restrict a corporation

    Are there any legal factors which could restrict a corporation in its attempt to pay cash dividends to common stockholders? Describe. A firm may be legally limited as to the dividends it can pay through existing bond indentures or loan agreemen

  • Q : State Schedule 11 Schedule 11 : It is

    Schedule 11: It is the outdated word for “Supplementary Schedule of Operating Expenses and Equipment.”

  • Q : What is Detail of Appropriations and

    Detail of Appropriations and Adjustments: A budget display, for each association, that replicates appropriations and adjustments by fund source for each of the character of expenditure, (that is, State Operations, Local Assistance, and Capital Outlay)

  • Q : What are Salaries and Wages Supplement

    Salaries and Wages Supplement: The annual publication issued in a while after the Governor's Budget, including a summary of all positions by department, unit, and categorization for the past, present, and budget years, as of July 1 of the present year

  • Q : What is Unanticipated Cost or Funding

    Unanticipated Cost or Funding Shortage: A lack or scarcity of (a) cash in a fund, (b) expenses authority due to an inadequate appropriation, or (c) expenses authority due to a cash problem (example, reimbursements not received on a timely base).