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Simple Interest

Interest which is paid only on the Principal and not on the additional amount generated by previous Interest payments. A formula for computing simple interest is


where $a(t)$ is the sum of Principal and Interest at time $t$ for a constant interest rate $r$.

See also Compound Interest, Interest


Kellison, S. G. Theory of Interest, 2nd ed. Burr Ridge, IL: Richard D. Irwin, 1991.

© 1996-9 Eric W. Weisstein