What is compound interest

Compound interest is interest on money that applies to the actual sum of money on an account. i.e. If you had $100 and deposited it into a savings account with 1% interest; after one month you would have $101. However, the next month you would not gain only $1, but rather $1.01, because the 1% interest rate is compounding on the actual amount, which has now changed to $101. The next month you would receive $1.021, and so on.
To calculate the interest rate of any question such as this, you must have three of these four values: The original account value, the ending value, the time that is being evaluated, and the interest rate. They are set up as the following equation: y=P·(1 + r/n)^(nt), whereas "y" is the final amount, "P" is the original amount, "e" is a constant (2.718281828.....), "r" is the interest rate, and "t" is the time elapsed. Also, "r" and "t" must refer to the same time variable. You cannot have an interest rate at 3% per month, and then throw in 3 for 3 weeks. The number you would use for "t" would be 3/4, as 3 weeks is 3/4 of one month.