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compound interest
(redirected from Compounding of interest)

    Also found in: Legal, Financial, Wikipedia 0.01 sec.

compound interest

Interest calculated by computing the rate against the original capital plus reinvested interest each time the interest becomes due. When simple interest is calculated, only the interest on the original capital is added.

For example, 10% compound interest on £2,000 over three years can be calculated as follows:

2,000 × 1.13 = 2,662

where the multiplier is arrived at by 1 ± the percentage as a decimal, with the power being the number of years over which the interest is to be calculated.



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For example, the extra taxes from rising tax rates may be offset by a larger amount of accumulated funds in an IRA due to tax-deferred compounding of interest at a higher rate of return.
Should taxable income be sheltered? A look at an IRA by Green, Tracy Wilson / Journal of Accountancy
nbsp;on the bank loan as well as the compounding of interest on the Zero Coupon Convertible Subordinated Notes.
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added section 6622 to the Code, which requires the daily compounding of interest on all amounts accruing after December 31, 1982.
Interest on federal tax deficiencies and overpayments by Heffernan, James V. / Tax Executive
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