Simple interest


 

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Simple interest

Interest, normally paid annually, which is earned on deposited capital only. Unlike compound interest, the annual interest is not added to the capital. For example, if the capital deposited is £1,000 and the interest rate is £80, you would receive £80 at the end of the first year and at the end of the second year. This contrasts with compound interest, where the £80 interest earned on the first year would be added to the original capital, and the amount of money earning interest in the second year would be £1,080.00.

Simple interest

Interest calculated as a simple percentage of the original principal amount. Compare to compound interest.



Simple interest

Similar Matches

Net interest cost (NIC)

Net interest cost (NIC)

The total amount of interest that will be paid on a debt obligation by a corporate or municipal bond issuer.


Forward interest rate

Forward interest rate

Interest rate fixed today on a loan to be made at some future date.


Applied or nominal interest rate

Applied or nominal interest rate

The rate used to calculate the interest due.


Amortizing interest rate swap

Amortizing interest rate swap

Swap in which the principal or notional amount rises (falls) as interest rates rise (decline).


Interest deduction

Interest deduction

An interest expense, such as interest on a margin account, that is allowed as a deduction for tax purposes.


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