Question

What is compound interest?

Answer 1

Answer

In compound interest, the total amount that we have that year (principle+interest in that year) is taken as principle for that year.

Explanation:

Example:- I have $1000 as principal for starting for 10% CI

      after one year : p=$1000 so amount= $1100

   after two years p=$1100 so amount = $1210

hope it helps

Answer 2

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.