Page "Jacob Bernoulli" Paragraph 10

One example is an account that starts with $ 1. 00 and pays 100 percent interest per year.

If the interest is credited once, at the end of the year, the value is $ 2. 00 ; but if the interest is computed and added twice in the year, the $ 1 is multiplied by 1. 5 twice, yielding $ 1. 00 × 1. 5² = $ 2. 25.

Compounding quarterly yields $ 1. 00 × 1. 25 < sup > 4 </ sup > = $ 2. 4414 ..., and compounding monthly yields $ 1. 00 ×( 1. 0833 ...)< sup > 12 </ sup > = $ 2. 613035 ....