Interest paid only on the original amount, not on the interest accrued is called what?

• A. Simple Interest
• B. Rule of 72
• C. Revenues
• D. Social Entrepreneurship

Answer: (A)

Interest calculated only on the original amount, not on any interest that accrues, is called simple interest. This means the interest amount stays the same each period, so growth is linear rather than compounded. The basic idea is I = P × r × t, with no piling-on of interest on previous interest. For example, $1,000 at 5% simple interest for 3 years yields $150 in interest, totaling $1,150. If it were compound interest, the interest would also earn interest, making the total higher over time. The other terms don’t describe this calculation method: the Rule of 72 is a quick doubling-time estimate, revenues are income, and social entrepreneurship focuses on ventures with social impact rather than how interest is calculated.