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Compound tariff |
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Compound tariffA tariff that combines both a specific and an ad valorem component.Similar MatchesCompoundingCompoundingThe process of accumulating the time value of money forward in time. For example, interest earned in one period earns additional interest during each subsequent time period. Compound Annual ReturnCompound Annual ReturnSee: Compound Annual Growth Rate Simple compound growth methodSimple compound growth methodCalculating a growth rate by relating terminal value to initial value and assuming a constant percentage annual rate of growth between the two values. Compound interestCompound interestThe interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan. Compound Annual Growth RateCompound Annual Growth RateBest defined by example. If you invest $100 today and make 5% in the first year and reinvest ($105) and make 8% in the second year, the compound annual growth rate is 6.489%. The calculation is $100x1.05x1.08=$113.4 which is what you end up with at the end of year two. The average return is [square root(113.4/100) -1]= 0.06489 or 6.489%. Note 1. If we had three compounding periods we would take the cubic root (power of 1/3). Note 2. If we had invested at exactly 6.489 in both periods, we get $100x1.06489x1.06489=$113.4. Note 3. The example is directed to a return - but CAGR could be applied to earnings growth, GDP growth, etc. Further SuggestionsCompounding frequencyDiscrete compounding compound interest Compound growth rate compound annual growth rate Compound option Continuous compounding Compound interest compound reversionary bonus Compounding period Realized compound yield |
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