what is compound interest?

Answer 1

Compound interest is the exponential rate of growth of anything.
It is given by the formula I.e^rt=I(1+r)^t where I is the Investment, r is the rate of interest, e is the exponential function whose value is 2.171, t is the time period say 3 years of 4 years etc;.
It takes into consideration the reinvestment rate of returns meaning an interest being reinvested again.

Answer 2

Compound interest, is interest which is added to the original principal and results in a "new" principal amount for calculation of interest going forward; in other words, compound interest is "interest on interest." Interest is then calculated in subsequent periods, not only on the original principal, but also on the interest that has been added. The more frequently interest is compounded, the faster the principal grows. Yearly compounded interest is considered the norm unless it is specified to be otherwise.

Answer 3

Compound interest, is interest which is added to the original principal and results in a "new" principal amount for calculation of interest going forward; in other words, compound interest is "interest on interest." Interest is then calculated in subsequent periods, not only on the original principal, but also on the interest that has been added. The more frequently interest is compounded, the faster the principal grows. Yearly compounded interest is considered the norm unless it is specified to be otherwise.

Answer 4

Compound interest is the interest added to original principal. New interest is then calculated on that new principal and added to it for as many periods as specified.

Answer 5

It's your biggest blessing if you are a "saver" or an "investor"
Simply put....if you get 10% on a $5000. investment.( $500) next year that 10% will be $550...after that $ 605....and $665...
....and your $ 5000 is $ 7310.
To see a better example go to http://www.finishrich.com/free_resources/lattecalculator.php