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Q: Does compounding always reduce principal

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Compounding interest is interest paid on both the principal and on accrued interest.

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.

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.

You can reduce the principal by making extra payments toward the principal each payment cycle. Ask your lender how best to do it and make certain the amount is deducted from the principal.You can reduce the principal by making extra payments toward the principal each payment cycle. Ask your lender how best to do it and make certain the amount is deducted from the principal.You can reduce the principal by making extra payments toward the principal each payment cycle. Ask your lender how best to do it and make certain the amount is deducted from the principal.You can reduce the principal by making extra payments toward the principal each payment cycle. Ask your lender how best to do it and make certain the amount is deducted from the principal.

Make sure that you persuade the Principal to reduce homework, and tests

mechanics and compounding

It all depends with the amount of the annual or daily compounding. In most cases it is however the daily compounding that pays more than the annual compounding.

True

Yes, but your lender has to agree to it.

compounding of interest refers to the action wherein, the interest paid to us over a period of time would increase gradually.Ex: Lets say you invest Rs. 10000/- at 10% per annum which is compounded every quarter.So interest for first quarter: Rs. 250/-Principal at the end of first quarter: 10,250/-Interest for second quarter: Rs. 256.25/-Principal at the end of second quarter: 10,506.25/-the increase in interest in the second quarter is because, the interest paid during the first quarter is also considered for interest payment in the second quarter. So, even though the principal amount we invested remains the same the interest varies because of compounding of interest.The shorter the compounding period, greater is the interest earned.Simple interest is to charge interest on the principle amount.compound interest is the interest calculated on the simple interest!

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