Compounding

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Compounding is the process of finding the future value of a single payment or series of payments.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Compounding. The process of finding the future value of a single payment or series of payments.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Compounding. The arithmetic process of determining the final value of a cash flow or series of cash flows when compound interest is applied.

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