Compound Interest
Compound interest is a financial concept where interest is calculated on both the initial principal and the accumulated interest from previous periods, leading to exponential growth over time. It is a fundamental principle in finance, investments, and savings, often described as 'interest on interest'. This concept is widely used in banking, retirement planning, and economic modeling to project future values.
Developers should learn compound interest for applications in fintech, financial modeling, and data analysis, such as building investment calculators, loan amortization tools, or retirement planning software. It is essential for creating accurate financial projections, analyzing investment returns, and implementing algorithms in banking or cryptocurrency systems where interest compounding occurs.