Does Compounding Annually Or Quarterly Yield More Interest?


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Lily James answered

Compounding is a process through which accumulated interest in added back to the principal such that interest is earned on the accumulated interest. It is a very important concept of finance and economics. And is used very frequently in actual transactions.

Compounding on Quarterly basis would obviously yield more interest. This is because after every 4 months, the accumulated interest is added to the principal and then once again interest is calculated on  the total value of money.

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