BANKING AFFAIRS

Detailed explanation-1: -Compound interest is the interest imposed on a loan or deposit amount. It is the most commonly used concept in our daily existence. The compound interest for an amount depends on both Principal and interest gained over periods. This is the main difference between compound and simple interest.

Detailed explanation-2: -Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on principal plus interest.

Detailed explanation-3: -Compound interest is a kind of interest based on adding the original principal-that is, the initial amount invested or borrowed-with the accumulated interest from previous periods.

Detailed explanation-4: -Compound interest is the interest you earn on interest. This can be illustrated by using basic math: if you have $100 and it earns 5% interest each year, you’ll have $105 at the end of the first year. At the end of the second year, you’ll have $110.25.

Detailed explanation-5: -Compound interest is the interest on a deposit calculated based on both the initial principal and the accumulated interest from previous periods. 1. Or, more simply put, compound interest is interest you earn on interest . You can compound interest on different frequency schedules such as daily, monthly or annually.