This is actually the power of compounding interest.

So now, in this situation. we are compounding the interest.

Even though it looks suspicious to you, it is called compounding interest.

And just keep in mind, all I'm doing is I'm compounding the interest, right?

What I want to do in this video is talk a little bit about compounding interest.

So let's say this is a different reality here, where we have 7 compounding annual interest.

This is annual interest, and they're usually compounding on a monthly basis, so 6 divided by 12.

You're actually compounding continuously.

It's one tragedy compounding another.

We said it's essentially 100 interest, but we're dividing it by 12 per month, but we're compounding it 12 times.

And then the amount that you owe me after one compounding period is 1 times the principal, plus my annual interest rate so in this case it's r divided by the number of times I'm compounding.

There are other videos on compounding continuously.

You're compounding every zillionth of a second.

So I think you get the sense here that, although the idea is reasonably simple, to actually calculate compounding interest is actually pretty difficult.

And the fact that you can actually calculate an interest rate compounding every zillionth of a second to me is a fairly amazing result.

So this is how many periods I'm compounding.

But I'm just going to keep it a simple example, compounding annually.

When we started compounding, at first you owed me 2, just when

First interest

Interest rate

Interest expense.

National interest.

100 interest.

Professional interest?

You get interest on the interest from previous years.

So hourly compounding I should've been doing this in green since it's money.

My interest quickened.

Places of Interest

Nominal interest rate

Market interest rate

Effective interest rate

On interest expense.

Interest and Taxes.

So what's interest?

Interest expense 500,000.

Net income plus interest. So they're adding back your interest.

And during harvest, put it back with interest, food interest.

lender, you are essentially getting that compounding if you keep lending your money out and if you lend the interest you get from the last person, and you lend that out the same rate.

Interest rates, or interest on your mortgage, or how much interest do I owe on my credit card.

So I have to pay some interest. There was 10 interest.

I have an interest! I have an interest! You tell me.

I have an interest! I have an interest! You tell me.

Politics didn't interest him.

If interest rates change.

We just paid interest.