Definition: Interest calculated on the applicable principal without charging interest on previously accrued interest for the period being measured.
Example
For a constant $10,000 principal, 6% annual simple interest for six months is $300: principal × rate × time.
Keep the distinction clear
Use matching time units and the problem's day-count convention. An amortizing balance changes over time, so a single original-principal calculation may not apply to every period.
Related terms
Principal · Interest · Amortized Mortgage
Keep studying
References: CFPB: simple versus precomputed interest
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