Question

What is compound interest

Answer 1

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.

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.