Many policy and management questions involve multiple-year decisions-where the returns are permitted to compound over several years. In other words, the principal plus accumulated interest is reinvested and allowed to accumulate. An example would be calculation of the amount to which $1,000 would accumulate at the end of five years with 5 percent annual interest. Figure 6-4 shows annual account balances. There is an easier way, however, to compute compound interest. Using the symbols previously introduced for values now and values at the end of a year.