Question 1

What is simple interest?

Accepted Answer

Simple interest is calculated only on the original principal, not on interest already earned. The formula is interest = principal × rate × time, so it grows in a straight line rather than accelerating.

Question 2

How is simple interest different from compound interest?

Accepted Answer

Simple interest ignores previously earned interest, while compound interest adds it back to the balance so future interest is larger. Over long periods compounding produces a much bigger total.

Question 3

When is simple interest used?

Accepted Answer

It's common on some short-term loans, car loans, and certain bonds or deposits. Many everyday savings and investments use compound interest instead.

Question 4

How do I calculate the total value?

Accepted Answer

Add the interest to the principal: total = principal + (principal × rate × time). The calculator shows both the interest earned and the final total.

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