Compound interest
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.
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
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
