What is a good lesson key point to say about htis: Whether the interest rate is simple or compound, interest is calculated for each interest period. When simple interest is calculated, the entire period of the loan or investment is the interest period. When the interest is compounded, there are two or more interest periods, each of the same duration. The interest period may be one day, one week, one month, one quarter, one year, or some other designated period of time. The greater the number of interest periods in the time period of the loan or investment, the greater the total interest that accumulates during the time period. The total interest that accumulates is the compound interest. The sum of the compound interest and the original principal is the future value or compound amount. The terms future value and compound amount are interchangeable but they can also be used to distinguish the accumulated principal and interest of an investment or the pay off of both the principal and interest of a loan