# simple interest

Simple Interest

A method of computinginterest. Interest is computed from the (original) principal alone no matter how much money has accrued so far.

 Formula:     A = P(1 + nr)     A = final amount      P = principal, or original amount      n = number of years      r = rate of interest per yearExample: $2,000 is deposited in an account paying 12% per year. Find the balance after 7 years using simple interest.Solution:P =$2,000, r = 0.12, and n = 7A = $2,000(1 + 7·0.12) =$3,680