Compounding


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Compounding

The process of accumulating the time value of money forward in time. For example, interest earned in one period earns additional interest during each subsequent time period.

Compounding

The process of earning interest on a loan or other fixed-income instrument where the interest can itself earn interest. That is, interest previously calculated is included in the calculation of future interest. For example, suppose someone had the same certificate of deposit for $1000 that pays 3%, compounding each month. The interest paid is $30 in the first month (3% of $1,000), $30.90 in the second month (3% of $1,030), and so forth. In this situation, the more frequently interest is compounded, the higher the yield will be on the instrument. See also: Amortization, Time value of money, Simple interest.

Compounding.

Compounding occurs when your investment earnings or savings account interest is added to your principal, forming a larger base on which future earnings may accumulate.

As your investment base gets larger, it has the potential to grow faster. And the longer your money is invested, the more you stand to gain from compounding.

For example, if you invested $10,000 earning 8% annually and reinvested all your earnings, you'd have $21,589 in your account after 10 years.

If instead of reinvesting you withdrew the earnings each year, you would have collected $800 a year, or $8,000 over the 10 years. The $3,589 difference is the benefit of 10 years of compound growth.

References in periodicals archive ?
based in Beverly, Massachusetts, is a privately held, specialty pharmaceutical company focusing on developing and commercializing value-added proprietary drug products and technologies in the prescription compounding sector of the pharmaceutical industry.
Broker of thermoplastics with compounding operation in China.
Also, it is not uncommon for compounding release agent ingredients, such as low molecular weight polyethylene, to be used with compounds based on polychloroprene or some other elastomer bases (ref.
Such a process typically coats the outside of the fiber bundles but doesn't wet out individual fibers the way twin-screw compounding does.
Good dispersion of compounding ingredients is usually the outcome from an effective mixing process.
Contact a Biltrite Industries Sales Representative at either of our locations to discuss your custom rubber mixing, calendering, slitting and compounding requirements at: Toronto, Canada 1-800-565-5875 or Findlay, Ohio 1-800-677-3578
Because DUSA's patents cover uses of ALA, compounding pharmacies are putting physicians at legal risk by offering it for sale and encouraging its use.
They are a facility in Burlington that makes rigid vinyls, and a second in Farmingdale that does laboratory work and compounding.
We are excited about the prospect of offering contract compounding services to many pharmacies which would rather focus on dispensing off-the-shelf drugs," said John Park, VP of Health Sciences Group -- Pharmaceutical Operations.
These companies developed their own expertise in compounding and molding of magnets, and they keep their secrets close to the vest.
CLEVELAND--(BUSINESS WIRE)--March 10, 1999--Ferro Corporation (NYSE:FOE) announced today the acquisition of Advanced Polymer Compounding Company (APC), headquartered in Carpentersville, Illinois.
For over half a century, Biltrite Industries has committed itself to attaining the highest standards in its custom rubber mixing and compounding business.