What type of interest is based on the original amount of money lent out, or the principal?
(1 point)
Responses
simple interest
simple interest
compound interest
compound interest
investor interest
investor interest
revolving interest
The correct answer is:
simple interest
The type of interest that is based on the original amount of money lent out, or the principal, is called simple interest.
The type of interest that is based on the original amount of money lent out, or the principal, is called simple interest. To determine the simple interest, you need to know the principal amount, the interest rate, and the time period the money is borrowed for. The formula to calculate simple interest is:
Simple Interest = Principal x Interest Rate x Time
Once you have these three variables, you can plug them into the formula to find the simple interest.