He who understands it earns it. He who doesn’t pays it.” Here’s a closer look at how compound interest works. The formula for compound interest is: Compound interest = [P (1 + i) n ...

Compound interest is interest calculated on both the initial principal and all of the previously accumulated interest. d3sign / Getty Images The formula for calculating simple interest is ...

Peerawich Phaisitsawan/Getty Images Continuous compound interest is a formula for loan interest where the balance grows continuously over time, rather than being computed at discrete intervals.