Compound interest is the extra addition to the principal amount of a loan or deposit. Its also named as interest on interest.
In compound interest, the principal amount increases at a higher rate. whereas in simple interest, this frequency is considerably low. Another name of simple interest is “Nominal interest rate”.
To calculate compound interest here is the formula: P[(1+i)n -1]
Here P =Principal Amount, i= nominal interest rate, n= no.of compounding periods