Simple interest is calculated only on the initial amount (principal) that you invested.
Example: Suppose you give \$100 to a bank which pays you 5% simple interest at the end of every year. After one year you will have \$105, and after two years you will have \$110. This means that you will not earn an interest on your interest. Your interest payments will be $5 per year no matter how many years the initial sum of money stays in a bank account.
This calculator can be used to solve various types of simple interest problems. The calculator will print easy to understand step-by-step explanation.