Compound Interest Compounding is when interest paid on an investment during the first period is added to the principal;then, during the second period,interest is earned on the new sum (that includes the principal and interest earned so far). THE COURSE OF FINANCE 2017 SPRING STTU 6-7Compound Interest  Compounding is when interest paid on an investment during the first period is added to the principal; then, during the second period, interest is earned on the new sum (that includes the principal and interest earned so far). THE COURSE OF FINANCE 2017 SPRING SJTU 6-7