Java BigDecimal calculate compound interest

import java.math.BigDecimal;
import java.text.NumberFormat;

public class Main 
{
   public static void main(String args[])
   {// w ww  .  ja  va 2s.  com
      // initial principal amount before interest
      BigDecimal principal = BigDecimal.valueOf(1000.0); 
      BigDecimal rate = BigDecimal.valueOf(0.05); // interest rate

      // display headers
      System.out.printf("%s%20s%n", "Year", "Amount on deposit");

      // calculate amount on deposit for each of ten years
      for (int year = 1; year <= 10; year++) 
      {
         // calculate new amount for specified year
         BigDecimal amount = 
            principal.multiply(rate.add(BigDecimal.ONE).pow(year));

         // display the year and the amount
         System.out.printf("%4d%20s%n", year, 
            NumberFormat.getCurrencyInstance().format(amount));
      } 
   }
}