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what is compound interest equation. The formula for compound interest is Compound Interest CI Principal 1Rate100n - Principal. Compound interest is the interest paid on both principal and interest compounded in regular intervals.
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The compound interest formula is the way that such compound interest is determined. Monthly Compound Interest Formula. 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.
It is different from the simple interest where interest is not added to the principal while calculating the interest during the next period. Simple interest is the interest generated only from the principal. Compound interest is contrasted with simple interest where previously accumulated interest is not added to the principal amount of the. The compound interest formula is P 1in - P where P is the principal i is the annual interest rate and n is the number of periods.
