Simple interest
Simple interest (alternatively known as regular interest) is an interest that is not earned on interest.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Simple interest. The situation when interest is not compounded; that is, interest is not earned on interest. Also called regular interest. Divide the nominal interest rate by 365 and multiply by the number of days the funds are borrowed to find the interest for the term borrowed.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Simple interest. Occurs when interest is not earned on interest.
According to Managerial Accounting by Braun, Tietz (5th edition),
- Simple interest. Interest computed only on the principal amount.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
