Compound

To compound means:

• to calculate interest, return or growth on an accumulating total,
• including earlier amounts of interest, return or growth.

Compound interest is calculated as ‘interest on interest’ as well as interest on the original principal amount.

Compound rates of return or growth are similarly calculated based on the rolling up accumulated total amount, rather than just the initial amount.

See also

• Compound Annual Growth Rate
• Compounding effect
• Compound interest
• Effective annual rate
• Interest
• Interest rate
• Nominal annual rate
• Simple interest