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posted by  Pee Wee on 7/4/2009 11:26:09 PM  |  status: Live  |  Earned Karma: 25

Please help with Accounting Question. Thanks!

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Accounting Management Accounting & Financial Accounting : Information for Decisions N/A N/A N/A
Question Details:
What if you were to have compounding interest on your investment? How would you explain how that affects your future value?

Inversely, what if you got a loan and were paying it down and they were charging your compound interest?
Pee-Wee
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posted by RedSox123 on 7/4/2009 11:50:58 PM  |  status: Live
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Response Details:
If interest compounds, you earn interest on previously earned interest payments.  As a result, the future value of an investment today becomes worth more because of the increased interest payments.

Conversely, if you have a loan and are paying it down, the opposite holds.
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