Example: There is $200 in bank account. Every year bank add 5%. Start: $200. After year: balance $210, interest $10; after 2 years: balance $220.5, interest: $10.5; after 3 years: balance $231.53, interest: $11.03; after 4 years: balance $243.11, interest: $11.58; How we see interest add every year by bank increase. We call this the capitalization of interest. To calculate how much money will be in an account for i.e. 20 years we can use formula: K = K_0 *(1+p)^n. K_0 - initially balance, p - interest rate applies on balance every time \cr, n - how much apply interest rate.