Compound interest

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Compound interest is a phenomenon that occurs when interest is earned on prior periods' interest.


Definitions

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

Compound interest. Occurs when interest is earned on prior periods' interest.

Definition

According to Principles of Economics by Timothy Taylor (3rd edition),

Compound interest. When interest payments accumulate, so that in later time periods, the interest rate is paid on the interest that has been earned and reinvested in previous years.

Related concepts

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