Compound Interest

複利 ／ compound-interest　—　Measuring

A calculation where interest is earned on interest. Principal × (one + annual interest rate) raised to the power of the number of years.

For the recipient, savings grow; for the payer, debt grows. They are two sides of the same equation. ⚠ Even with a small difference in rates, the difference in the total amount becomes large over many years. The difference between 1% and 3% per year approaches one-quarter of the principal in ten years.