ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Compound interest is the interest calculated on the principal and the interest accumulated over the previous period. It is different from simple interest, where interest is not added to the principal while calculating the interest during the next period.

Detailed explanation-2: -Compound interest is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods.

Detailed explanation-3: -P is the principal (the starting amount) r is the annual interest rate, which is written as a decimal. n is the number of times the interest compounds each year.

Detailed explanation-4: -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.