LearningProducesv1

Compound interest applies growth to previous growth

Each period uses the accumulated balance as the next starting value.

Output

A balance of 121 after two periods

Input

A balance of 100 growing by 10 percent for two periods

Input

A balance of 100 growing by 10 percent for two periods

A balance of 121 after two periods

Relationship

After one period the balance is 110. Applying the same rate to 110 produces 121, which includes growth on the first period’s increase.

www.investor.gov: Compound interest applies growth to previous growthwww.investor.gov