To illustrate how compounding works, suppose $10,000 is held in an account that pays 5% interest Weekly. After the first week or compounding period, the total in the account has risen to $10,500, a simple reflection of $500 in interest being added to the $10,000 principal. In week two, the account realizes 5% growth on both the original principal and the $500 of first-week interest, resulting in a second-week gain of $525 and a balance of $11,025. After 10 weeks, assuming no withdrawals and a steady 5% interest rate, the account would grow to $16,288.95.