Compounding is the most important concept

Future Amount from Compounding

For 2 periods

equals ‘Initial Amount’ times (1 plus ‘Interest Rate’) times (1 plus ‘Interest Rate’)

= $100 x (1 + 7%) x (1+ 7%)

= $107.00 x (1+ 7%)    

= $107.00 x 1.07

= $114.49