Finance Dictionary
Compound Interest
Interest calculated on both the initial principal and the accumulated interest from previous periods. Known as "the eighth wonder of the world" for wealth-building.
Formula
A = P × (1 + r/n)^(n×t)
Example
₹1 lakh at 12% compounded annually grows to ₹3.1 lakh in 10 years vs ₹2.2 lakh with simple interest.