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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.


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 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 ?
As indicated in an earlier study by Stark and others, the use of liquid polymer additives to crumb does enhance the properties of compounded blends with virgin elastomers, particularly the tear strength.
It also can be blended and compounded with natural rubber to give lower cost rubber products with good physical properties.
Reactor TPO is less expensive to make than compounded TPO, partly because ethylene monomer is a less expensive feedstock than EP rubber, and partly because compounding has the cost of grinding, blending and extruding the rubber with PP.
I haven't seen anything in writing, but resin companies say they're willing to market at a 10-15% lower price |than equivalent compounded grades~.
For example, both control formulations' scorch times were reduced more than 40% when compounded with TMA.
Depending on the application's requirements and processor's preferences, SFR-100 resin may be compounded with any number of polyolefin systems, yielding different flame and mechanical properties.
Highly extended compounds: Since medium thermal black does not seriously degrade inherent rubber properties, it can often be compounded at considerably high loading levels.
Not only are cost advantages involved, but a molder can have his own scrap custom-ground and treated, thus insuring him control not only of its content, but also any chemical resistance properties he may have compounded into the original recipe.
The compounded rubber was left overnight before vulcanization.