compound interest (redirected from Continuous compounding)

compound interest

n.

Interest computed on the accumulated unpaid interest as well as on the original principal.

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compound interest

n

(Economics, Accounting & Finance / Banking & Finance) interest calculated on both the principal and its accrued interest Compare simple interest

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compound interest

Interest computed on the original principal plus any accrued interest. Thus if 5% is the rate of interest per year and the principal is $1000, the compound amount after one year will be $1050, after two years it will be $1050 × 0.05 = $1102.50, after three years it will be $1102.50 × 0.05 = $1157.63, and so forth. Mathematically, if P is the original principal and I the rate of interest expressed as a decimal, the compound amount at the end of the nth year will be P(1 + I)ⁿ. The growth of the compound amount is exponential and not linear. Compare simple interest.

Thesaurus

Noun

1.

compound interest - interest calculated on both the principal and the accrued interest interest - a fixed charge for borrowing money; usually a percentage of the amount borrowed; "how much interest do you pay on your mortgage?"

Translations

compound interest n → interesse m composto