Not long ago in a village in Babylon, there lived a scholar who was an expert in math! 
He was a poor man, it was sometimes very difficult for him to manage the monthly expenses of his family. It was then he thought of a brilliant idea to earn loads of money using one simple trick. 
The concept of banks wasn't existent in the country. People used to lend money from businessmen, he then thought of executing the idea. He lent the money to a poor man 100 coins at an interest rate of 5 percent per month ( 5 coins per month)on a pre-stated deal that he would return the money in a month. At the end of the month as promised the person repaid the total amount lent added with the interest. Now the scholar immediately took the coins along with its interest and lent it to an other man. This time the principle was 105 coins. The interest was still 5 percent per month. In no time this man grew rich and became the richest landlord of the country. Thus the Compound Interest came into play. 


-Supreet