Answer:
In simple interest, every period you calculate the interest based on the initial amount that you invest. For example, if you invest $100 at a rate of 10%. Every year you will have $10 more in your account because 10% of $100 is $10. So, the first two years you will have
Year 0 = $100
Year 1 = $100 + $10 = $110
Year 2 = $110 + $10 = $120
On the other hand, on compound interest, the interest is calculated based on the amount that you already have in the account. For example, if you invest $100 at a compound rate of 10%.
Year 0 = $100
Year 1 = $100 + $10 = $110
Year 2 = $110 + $11 = $121
Where we can see that there is a change in year 2 because we calculate 10% of $110 which is equal to $11.