**Best explanation to understand and solve the compound interest problems.**

This section is about the aptitude topic COMPOUND INTEREST. It is one of the complicated topics in an arithmetic aptitude. But it will be easy for you when you clearly understand the topic.

There are many formulas to calculate compound interest. We have provided you with a set of explanations for the terms used in compound interest and also given you the explanation of formulas.

Learn the article completely and get to know more about this topic. Also take up the aptitude test in our website and practice for your exams.

**What is compound interest?**

The addition of interest to the principal sum each year or some fixed time period is known as compounding. So, the compound interest is the interest on interest.

The interest of each year or some fixed time period is added to the principal sum and the new amount becomes the principal for the next year and interest is calculated on the increased amount for the next year.