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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:
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
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