Compounded interest vs simple interest

The proper terminology is compounded return vs simple return. Interest refers to the coupon rate or dividend yield of an income investment, whereas return refers to the growth of investment value.

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In your example, the principal is $1,000, and return is 700% over 10 years, that means 700% simple return over 10 year period, and you end up with $8,000.

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To get annualized compounded return, the formula is:

Compounded Return = (Ending value / Starting value) ^ (1 / Years) - 1

= ($8,000 / $1,000) ^ (1 / 10) - 1

= 23.11% p.a.

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Compounded Return is what we usually called the Internal Rate of Return.

If they mean 700% total return over 10 years, it would be a simple interest.

However, if they mean an annual return of 700%, that would be compounded.

Always clarify before making an investment!