Compound Interest

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Compound Interest

 

interest computed not only on an original sum but also on the interest accruing to the original sum over a preceding period.

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16) Assuming the short-term AFR at 6%, the semiannual compounding of interest for a full semiannual period is calculated by multiplying the loan balance at the beginning of the period by 3% (.
Even with moderately higher tax rates at retirement, IRA tax-free compounding of interest provides a higher rate of return and better protection from inflation by accumulating funds at a faster rate for retirement.
The only growth in bond portfolios came from the compounding of interest payments.
Net interest expense increased to $12,396,000 from $11,618,000 primarily due to an increase in the effective interest rate on the bank loan as well as the compounding of interest on the Zero Coupon Convertible Subordinated Notes.