The effective annual interest rate shows the true yearly cost of borrowing or return on investment, factoring in compounding.

What these two processes share is baked into the math of each. In fact, in that respect, they're nearly identical. They both involve some stuff (atoms or money) that is either growing or shrinking.

Learn about compound interest. We will look at how to determine the final value, initial value, interest rate and years needed. We will investigate problems compounded continuously, daily, weekly, ...