The compound interest rate is that which is calculated on a capital to which the interest previously generated is added, so that these in turn produce new interest.
The following formula is used to calculate compound interest:
Vf= C (1+i)n
In which:
Vf: Sum of the principal and interest to be paid.
C: Capital or amount of the loan.
i: Interest rate.
n: Number of periods in which compound interest is capitalized.
Related terms
Creditor | Capital | Debtor | Lender | Deposit | Mortgage | Mixed interest rate mortgage | Variable interest rate mortgage | Foreign currency mortgage | Reverse Mortgage | Subprime Mortgage | Interest | Simple interest | CPI | Loan | NIR | Interest rate | Active interest rate | Compound interest rate | Fixed interest rate | Passive interest rate | Variable interest rate