What are compound interest and simple interest

Compound Interest:-

Compound interest means earning Interest on interest. For example we have BDT 100 to deposit at 10% interest for 3 years. Then interest for the first year will be BDT 10 and it will be added with the principle amount so the principle amount will be BDT 110 for the second year and interest will be charged on 110 for the second year. This is called compound interest.

Simple Interest:-

Interest earned only on the original investment and no interest is earned on interest. For example if we have BDT 100 to deposit at 10% interest for 3 years. Then interest for the first year will be BDT 10 and it will not be added with the principle amount. So the principle amount will remain unchanged during the 3 years and interest revenue will also be same during the 3 years. This is simple interest.