Compound interest, but only if the previous interest is accumulated.
Thats what im wondering
A sinking fund makes money grow over time by adding interest to previous interest earned. ... The rate of return matters when it comes to compound interest.
calculates the interest you owe for your balance at the end of the previous billing period
It is interest on simply the original capital. After the first period, compound interest involves interest on the interest earned in previous periods and soit not simple.
compounding interest.... i think
Simple interest 140.00, compound interest (where interest is added to the previous months interest) 140.45
The concept is that at the end of each time interval, the interest for that period is added to the principal. As a reult, the interest for any period is calculated not only on the principal but also the interest from previous periods.
With compound interest, in the second and subsequent periods, you are earning interest on the interest earned in previous periods. If you withdraw the interest earned at the end of every period, the two schemes will earn the same amount.
P.C.P.A. is the "Percent Compounded Per Annum." This measurement is used when trying to determine the compound interest for previous years.
Compound interest is when interest is charged on the principal plus the interest. An example is a credit card debt. If you carry a balance from month to month you are charged interest on the total amount owed including the interest from previous months. Simple interest is calculated on the amount borrowed over a fixed amount of time and does not charge interest on the interest.