Compound Interest

Compound Interest means:
the interest earned on principal plus interest that was earned earlier. If $100 is deposited in a bank account at 10%, compounded yearly, the depositor will be credited with $110 at the end of the first year and $121 at the end of the second year. The extra $1, which was earned on the $10 interest from the first year, is the compound interest. Tax penalties are based on compound interest formulas.