Simple interest is an amount of money that is added to a savings or investment account that is based only on the original amount saved or invested.
For example, if simple interest is added at a rate of 5% annually, this would mean that 5% of the original investment amount is added at the end of every year the original amount is invested.
For a £20 000 investment,
made for 6 years (at 5% simple interest),
then 5% of £20 000 = £1000
and so £1000 will be added to the investment at the end of each year
So after 6 years, the investment would be worth £26 000
Simple interest is where "interest-doesn't-earn-interest" whereas compound interest deals with "interest-earns-interest".
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