Simple interest in interest that is NOT compounded:Example: $1,000 @ 6% simple interest for 1 year
=$1,000 x 6/100 =$60 - This is simple interest for 1 year. If it were compounded, it would look like this:
$1,000 x (1+ 6%/12)^12 =$1,000 x 1.005^12 =$1,000 x 1.06168=$1,061.68 - $1,000 =$61.68. The extra $1.68 is interest on interest, if you can undestand that!.
