Compounding
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Compounding
Compounding:
Compounding is when the interest is ascribed to an existing principal amount and the interest already paid. In this process, assets earnings from either capital gains or stakes are reinvested to generate additional revenues over time. This growth is calculated by using exponential functions. This happens because the investment will generate interest from its initial principles and the accumulated earnings from the preceding periods. It differs from linear growth and has a claim on interest approach. Legal Times will adequately brief you on this.