The interest you earn each year is added to your principal, so that the balance doesn't merely grow, it grows at an increasing rate.
The amount which you have invested.
An interest rate is the cost of borrowing money, or conversely, the income earned from lending money. Interest rates are expressed as percentage of the principal per period.
Period in which you have invested.
The number of compounding periods in one year.
Here is the formula for finding the compound interest
John has invested 1,00,000 at compound interest rate of 10% for 5 Years where interest compounded yearly with principal