Simple Interest

Simple Interest

Simple interest is the amount of money paid for borrowing money or earned for investing money.

Simple interest is often calculated as a percentage of the sum borrowed.

Example

If a sum of $1000 is borrowed for one year at a simple interest rate of 5% per year, the amount to be reimbursed after one year is$1000 + 5% of $1000, or 1000 + 50 = 1050, or$1050. The amount of interest is \$50.