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Interest Rate The amount a lender charges a borrower for the use of an asset is referred to as the interest rate in the field of finance. Therefore, the interest rate is the cost of the debt for the borrower while it is the rate of return for the lender.
What is the compound interest ?
Compound interest is generally understood to be interest that is earned on both the original investment and any subsequent interest. Compound interest is, thus, the interest earned on both the initial principal and the interest that has already been accrued on this principal. As a result, the key feature of compound interest is that interest generates interest. This idea of including a carrying charge causes a deposit or loan to grow more quickly.
Compounding is done on a monthly basis (12/Yr) compounding, an annual (1/Yr) compounding, a quarterly (4/Yr) compounding, and an annual (1/Yr) compounding basis.
FV = P (1+ r/m)^mt
FV, or the future value of the investment, is the total sum in our calculator.
The starting balance is P. (the value of the investment)
the yearly interest rate, or r. (in decimal)
m is the number of times per year that interest is compounded (compounding frequency)
t - the length of time that the funds are invested for
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