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Compound interest is the recurrence of the interest being added to the principal sum over periods of time. Compound interest is also referred to the as simple interest rate. The formula of compound interest rate is **P(1 + i) ^{t}**. P is the principal amount which is the amount of cash you have starting off.I is the interest rate of which is added to the principal each year and T is the time the number of years that the investment will run for.