Interest is of two types. Firstly there is simple interest where a fixed amount is calculated on the principal amount for a given period of time. If it calculated on say an "x" amount for a couple of years then the interest amount remains the same for all those years unless the principal amount is increased.

Compound interest on the other hand involves each subsequent amount of interest earned being added or compounded to the principal amount for subsequent interest calculations.

Simple interest can be calculated a simple formula of Interest being equal to the product of the principal, interest rate and term (time). The formula of compound interest on the other hand is Principal Amount × (1+Rate of Interest) ^Period. Period here refers to Time.

 8% interest on $3,051.26 starting 2/2001 to 8/2007