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However, compound interest is the interest earned not only on the original principal, but also on all interests earned previously In other words, at the end of each year, the interest earned is added to the original amount and the money is reinvested If we use compound interest for the situation above, the interest will be computed as follow: This is an introductory assignment that connects compound interest to real-life. In part one, students decide which of three credit offers is the best way to finance