Simple Interest

Interest which is calculated on the beginning amount of principal only. For example, simple interest earned over five years on principal of $100 would appear as such:

  • Year 1:   $100 + 5% = (100 x 1.05) = Balance of $105
  • Year 2:   $100 + 5% = (100 X 1.05) = Balance of $110
  • Year 3:   $100 + 5% = (100 X 1.05) = Balance of $115
  • Year 4:   $100 + 5% = (100 X 1.05) = Balance of $120
  • Year 5:   $100 + 5% = (100 X 1.05) = Balance of $125





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