Compound interest

Part of a series of articles on the
mathematical constant e
Properties
Natural logarithm Exponential function
Applications
compound interest Euler's identity Euler's formula half-lives exponential growth and decay
Defining e
proof that e is irrational representations of e Lindemann–Weierstrass theorem
People
John Napier Leonhard Euler
Related topics
Schanuel's conjecture
v t e

Compound interest is interest accumulated from a principal sum and previously accumulated interest. It is the result of reinvesting or retaining interest that would otherwise be paid out, or of the accumulation of debts from a borrower.

Compound interest is contrasted with simple interest, where previously accumulated interest is not added to the principal amount of the current period. Compounded interest depends on the simple interest rate applied and the frequency at which the interest is compounded.