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compound

compound(number1, number2)

where number1 represents the interest rate (expressed as a decimal) and number2 represents the number of periods over which the interest is compounded.

Value returned: value of one unit of principal invested at the interest rate and compounded over the specified number of periods, or a number equal to (1 + rate) ^ periods

An interest rate involves a certain percentage (expressed as a decimal) per some unit of time—usually per year. You must use the same unit of time to measure the number of periods.

For example, if you have a yearly interest rate that is compounded monthly, you must convert the yearly rate to the interest per month (rate / 12) and be sure to express the number of periods as months (2 years = 24 months).

Examples

Use compound to compute a future value as follows:
futureValue = principal * compound(rate,periods)
Example 1: $100 invested for 20 years at 10% interest compounded yearly.
futureValue = 100 * compound(.10,20) = 672.75
The net gain over the original investment is 672.75 - 100 = 572.75. Note that $100 invested for 20 years at 10% simple interest (which applies only to the principal) yields $300, for a net gain of only $200.
Example 2: $100 invested for 20 years at 10% interest compounded monthly.
futureValue = 100 * compound(.10/12,20*12) = 732.81

Demo Script

on compoundDemo
  set numberFormat to "0.00"
  answer "$100 invested for 5 years at 5.75% interest" &&¬
  "compounded quarterly yields $" & (100 * compound(.0575/4,5*4))
end compoundDemo

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Version 0.8b4 (July 4, 2025)

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