What type of interest does not use the same principal amount for every calculation?

Compound interest is characterized by the fact that it does not use the same principal amount for each calculation of interest. In compound interest, the interest earned on an investment is added to the principal amount, effectively increasing the principal for future interest calculations. This means that each period's interest is calculated based on a growing principal balance, which causes the total amount to grow at an increasing rate over time.

For example, if you earn interest on an investment, the amount of interest earned in the first period is added to your initial investment (the principal). In the next period, you calculate interest not only on the original principal but also on the accumulated interest from the previous period. This compounding effect results in greater interest being earned over time compared to simple interest, which only calculates interest based on the initial principal amount throughout the entire investment period.

The other types of interest mentioned do not exhibit this compounding behavior. Simple interest remains constant as it is calculated only on the original principal, fixed interest typically refers to an interest rate that does not change but is still based on a singular principal, and variable interest can fluctuate but does not inherently involve adjusting the principal base for each calculation like compound interest does.