What is the compound interest definition?
First of all, you should find out what compound interest is and how it differs from simple interest. Only then it will be possible to compare these two values.
Generally, compound interest is defined as an interest that is earned not only on the initial amount invested but also on any interest. In other words, compound interest is the interest calculated on the initial principal and the interest which has been accumulated during the consecutive periods as well. This concept of adding a carrying charge makes a deposit or loan grow at a faster rate.
You can use the compound interest equation to compute the value of an investment after a specified period of time or to estimate the rate earned when buying and selling some assets if they are viewed as an investment. It also allows you to calculate some other questions such as the doubling time of investment.