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Coming back to compound value concept:
Assuming that your school has given you the definition of what compound interest is, we will revise the idea with an example here.
Take for instance;
A man borrows $3000 with a 10% annual interest for 3 years. He doesn’t want to make regular repayments and hence, needs to calculate the total figure. Here’s how:
- For the 1st year, the interest would be ($3000 x 10%) $300. So, total for the same year would be $3300.
- For the next year, 10% interest would be calculated on $3300. This results in ($3300 x 10% = $330) $3630 for the 2nd
- For the last year, again, 10% interest would be on $3630 which results in ($3630 x 10% = $363) $3993
Hence, the total interest for 3 years would be ($300 + $330 + $363) $993. And the repayment figure would be $3993. This is the concept of compound value.
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Compound value can turn dollars into big money!
Facts about compound value you should know
It is important for every learner to know the benefits of compound valuefor financial success. In the course of time, this concept of mathematics can transform a few dollars into big amounts. We’ll explain how, once you avail our compoundvalue concept homework help service.
We’ll share with you some of the interesting facts that your professor didn’t tell you.
- This is the method that banks use to calculate new interests.
- Remember, compound value concept is like a double edged sword. It can be cruel if one starts borrowing money. It would benefit in saving money regularly.
- Compound interest adds money quite faster in your bank account.
- It is said that time will remain by your side with this math’s theory.
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