write short definition of simple interest
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When we borrow some money from another person for a certain period after some time we have to pay some extra money to him. This interest is always same for same period .So it is known as simple interest.
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Interest computed only on the principaland (unlike compound interest) not on principal plus interest earned or in curredin the previous period(s). Simple interest is used commonly invariable rate consumer lending and in mortgage loans where a borrower pays interest only on funds used. Formula: Principal amount x Annual interest rate x Number of years.
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