what is the relationship between compound interest and exponential growth? in your own words please so i understand
Stacey Warren - Expert brainly.com
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Compound growth, exponential growth are words used to describe ways in which the value of an investment will grow
dous that explain it enough
This is probably more in regards to the question you asked last night, but maybe it will help.
Let's say you have \(\Large $20\). And let's say you invest it at a rate of 25%.
With simple interest, the interest that you're gaining is always calculated off of the base amount.
So the next time the interest is calculated, you will have \(\Large $25\).
The time after that will be \(\Large $30\).
See how it keeps increasing by 25% of the base amount?
(25% of 20 is 5).
With compound interest we don't calculate interest based off of the base, but off of the new total.
So using our last example:
We start with \(\Large $20\) and after our first pay period we gain some interest putting us at \(\Large $25\). Our next pay period after that, the interest generated will be 25% of our new amount, \(\Large $25\).
25% of $25 is \(\Large $31.25\).