Compound Interest
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Beginner Level
Global
Banking & Finance
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Definition
Interest calculated on both the initial principal and the accumulated interest from previous periods.
Detailed Explanation
Albert Einstein reportedly called compound interest the "eighth wonder of the world." The formula is A = P(1 + r/n)^(nt). Long-term investing benefits greatly from compounding.
Example
₹10,000 at 10% annual interest becomes ₹25,937 after 10 years with annual compounding.
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