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Review Numbers & Money Exchange│ Unit11054.1 The Concept of Simple Interest Simple interestis money you can earn by investing some funds.A percentage (the interest) of the principal is added to the amount, making your initial investment grow. When money is borrowed, interest is chargedfor the use of that money for a certain period of timethe sum paid back includes. theprincipal (amount of money that was borrowed) and the interest.The amount of interest depends on the interest rate,the principal andborrowing period. Simple interest is an interest paid or computed on the original principal of a loan.It is the amount of money that lenders charge for the use of their money. Principal refers to the original amount of money borrowed. Interest, usually shown as a percentage, (forexample, 6%) is also paid back.When you repay a loan or a credit card, part of your payment goes to the principal; some of it also goes toward paying interest.Simple interest is generally charged for borrowing money for short periods of time. The total amount due at the end of each period is calculated against the original principal and the interest that was earned during that period. When someone lends money to someone else, the borrower usually pays a fee to the lender. This fee is called \interest paid each year is a fixedpercentage of the amount borrowed or lent over a certain period/ durationseefigure (4-1-1).►Simple interestis the most basic way to calculate the amount you will earn or pay for an investment or loan.SimpleInterest:
