interest compounding.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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True or False
1. The effect of exponential growth is similar to interest compounding. If one invests $100 at 10% per year, compounded annually, then, after one year, $10 interest is credited, for a new balance of $110. But if the interest is not withdrawn, then at the end of the second year, the interest is $11 (10% of $110), and the new balance is $121.
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