 
 <prompt> ```Summary:

Di interest rate wey dey for your investment prospectus or loan agreement na annual rate. If your car loan, for example, na 6% loan, you go pay 6% interest every year. Compounding once at the end of the year na di easiest calculation for compounding interest. A debt fit compound interest annually, monthly or even daily. Di more frequently wey your debt compound, di faster you go accumulate interest. You fit look compound interest from di investor or di debtor point of view. Frequent compounding mean say di investor interest earnings go increase at a faster rate. E also mean say di debtor go owe more interest while di debt dey outstanding. For example, savings account fit compound annually, while pay-day loan fit compound monthly or even weekly. Assume say you get $1,000, 6% savings bond wey US Treasury issue. Treasury savings bonds dey pay out interest each year based on their interest rate and current value. Interest wey dem go pay for year 1 go be $60 ($1,000 multiplied by 6% = $60). To calculate interest for year 2, you need to add di original principal amount to all interest wey you don earn so far. In this case, di principal for year 2 go be ($1,000 + $60 = $1,060). Di value of di bond na $1,060 now and di interest payment go dey calculated from this value. To see di bigger impact of compound interest, calculate interest for later years. As you dey move from year to year, di principal amount go dey grow. Multiply di year 2 principal amount by di bond interest rate. ($1,060 X 6% = $63.60). Di interest wey you earn go dey higher by $3.60 ($63.60 - $60.00). That one na because di principal amount don increase from $1,000 to $1,060. For year 3, di principal amount na ($1,060 + $63.60 = $1,123.60). Di interest wey you earn for year 3 na $67.42. That amount go dey added to di principal balance for di year 4 calculation. Di longer wey debt dey outstanding, di bigger di impact of compounding interest. Outstanding mean say di debt still dey owed by di debtor. Without compounding, di year 2 interest for simply be ($1,000 X 6% = $60). In fact, every year interest wey you earn go be $60 if you no earn compound interest. This one dey known as simple interest. E fit dey handy to visualize compound interest by creating a simple model for excel wey go show di growth of your investment. Start by opening a document and labeling the top cell for columns A, B, and C "Year," "Value," and "Interest Earned," respectively. Enter the years (0-5) for cells A2 to A7. Enter your principal for cell B2. For example, imagine say you start with $1,000. Input 1000. For cell B3, type "=B2*1.06" and press enter. This one mean say your interest dey compound annually at 6% (0.06). Click on the lower right corner of cell B3 and drag the formula down to cell B7. The numbers go fill in appropriately. Put 0 for cell C2. For cell C3, type "=B3-B$2" and press enter. This one suppose give you di difference between the values for cell B3 and B2, wey represent the interest wey you earn. Click on the lower right corner of cell C3 and drag the formula down to cell C7. The values go fill themselves in. Continue this process to replicate the process for as many years as you want to track. You fit also easily change values for principal and interest rate by altering the formulas wey you use and cell contents.``` <response>: ```Define annual compounding. Calculate interest compounding annually for year one. Compute interest compounding for later years. Create an excel document to compute compound interest.```
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