Simple interest is a method of calculating the interest charge on a loan or investment. It is the cost of borrowing money and is typically expressed as a percentage of the principal amount. Simple interest is calculated using the principal amount only and does not include compounding interest. The interest rate is calculated against the principal amount, and that amount never changes as long as payments are made on time. Simple interest is an easy way to look at the charge youll pay for borrowing.

The formula to calculate simple interest is:

$$Simple\ Interest = P \times r \times t$$

where P is the principal amount, r is the annual interest rate, and t is the time period in years.

For example, if you borrow $1000 at an annual interest rate of 5% for 2 years, the simple interest would be:

$$Simple\ Interest = 1000 \times 0.05 \times 2 = 100$$

So, the total amount to be repaid would be $1100.

Simple interest is different from compound interest, which is interest earned not just based on the saved or borrowed amount, but also on the interest already earned so far. Compound interest helps you earn more when you save, but it can also cost you more when you borrow.

In summary, simple interest is a straightforward method of calculating the interest charge on a loan or investment. It is calculated using the principal amount only and does not include compounding interest.