Compound interest is a method used to calculate the interest on money that is either saved or borrowed. It is introduced as one of the two primary ways to compute interest, alongside simple interest.

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In algebraic finance applications, interest is the amount of money paid or earned on an initial deposit or loan, commonly denoted by the variable $$I$$. When money is deposited into a bank, the bank pays interest; conversely, when taking out a loan, interest must be paid on the amount borrowed.

Interest (Algebra)

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