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Richard Witt's book Arithmeticall Questions, published in 1613, was a landmark in the history of compound interest. It was wholly devoted to the subject (previously called anatocism), whereas previous writers had usually treated compound interest briefly in just one chapter in a mathematical textbook. Witt's book gave tables based on 10% (the ...
The formula for compound interest is: Initial balance × ( 1 + ( interest rate / number of years ) )number of years x compounded periods per year.
Compound interest can help turbocharge your savings and investments or quickly lead to an unruly balance, stuck in a cycle of debt. Learn more about what compound interest is and how it works.
The formula above can be used for more than calculating the doubling time. If one wants to know the tripling time, for example, replace the constant 2 in the numerator with 3. As another example, if one wants to know the number of periods it takes for the initial value to rise by 50%, replace the constant 2 with 1.5.
Understanding how compound interest works and how it applies to your student loan payment formula or your savings account could be the key to long-term financial success. Whether you are borrowing ...
The formula for the annual equivalent compound interest rate is: (+) where r is the simple annual rate of interest n is the frequency of applying interest. For example, in the case of a 6% simple annual rate, the annual equivalent compound rate is:
Over the 30-year period, compound interest did all the work for you. That initial $100,000 deposit nearly doubled. Depending on how frequently your money was compounding, your account balance grew ...
Also known as the "Sum of the Digits" method, the Rule of 78s is a term used in lending that refers to a method of yearly interest calculation. The name comes from the total number of months' interest that is being calculated in a year (the first month is 1 month's interest, whereas the second month contains 2 months' interest, etc.).