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Does the future value of an investment increases as the number of years of compounding at a positive rate of interest declines?
Wiki User
∙ 12y ago
yes
Wiki User
∙ 12y ago
No, the future value of an investment does not increase as the number of years of compounding at a positive rate of interest declines. The future value is directly proportional to the number of compounding periods, so as the number of years of compounding decreases, the future value of the investment will also decrease.
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The concepts of simple interest and compound interest and how these affected the results of your investment exercise?
Simple interest (compounded once) Initial amount(1+interest rate) Compound Interest Initial amount(1+interest rate/number of times compounding)^number of times compounding per yr
What is the best definition of compounding interest-?
Interest paid on interest previously received is the best definition of compounding interest.
How does compound interest affect the future value of an investment?
Increases
What is the rate on an investment that tripples 2435 in 5 years. Assume interest is compounded monthly?
It doesn't matter how much the original investment is. If it triples in 5 yearswith monthly compounding, then the interest rate is 22.175% (rounded)
What is best definition of compounding interest?
Interest paid on interest previously received is the best definition of compounding interest.
What is the terminology of compounding interest?
The terminology of compounding interest means adding interest to the interest that one already has on an account. The interest could be added to a bank account or to a loan.
Does the more compounding periods per year decreases the total amount of interest you receive over the year?
No. The more often it's compounded, the more interest you receive,and the faster your investment grows.
What is compounding rate?
Compounding rate is the interest rate at which the rate grow faster than the simple interest on deposit or loan made. It is also said "interest on interest".
Do interest rates rise when inflation declines?
Interest rates are simply the price of money. When inflation declines, interest rates typically decline also.
What does continuous compounding mean?
Continuous compounding is the process of calculating interest and adding it to existing principal and interest at infinitely short time intervals. When interest is added to the principal, compound interest arise.
What is the difference between effective interest method and constant yield method?
An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: Consider a stated annual rate of 10%. Compounded yearly, this rate will turn $1000 into $1100. However, if compounding occurs monthly, $1000 would grow to $1104.70 by the end of the year, rendering an effective annual interest rate of 10.47%. Basically the effective annual rate is the annual rate of interest that accounts for the effect of compounding.
Why would you use a compounding interest calculator?
You would use a compounding interest calculator in order to determine how quickly a certain amount of money will grow due to compounding interest. It is useful for determining how much to save and invest over several years.
