ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Compound interest is the interest paid on the original principal and on the accumulated past interest. When you borrow money from a bank, you pay interest. Interest is really a fee charged for borrowing the money, it is a percentage charged on the principal amount for a period of a year–usually.

Detailed explanation-2: -Compound interest is interest calculated on an account’s principal plus any accumulated interest. If you were to deposit $1, 000 into an account with a 2% annual interest rate, you would earn $20 ($1, 000 x . 02) in interest the first year.

Detailed explanation-3: -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. In Mathematics, compound interest is usually denoted by C.I.