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Simple interest does not compound. In other words, If you start off with $500 and get $5 in interest, the $5 you got in interest will not be included when calculating the amount of interest you will get next year.

Simple interest can be calculated by the formula i = prt, where i is the amount of money earned from the interest, p is the principle (starting money), r is the rate (as a decimal,) and t is the time in years.

Another formula is used to calculated the accumulated amount: A = p(rt + 1), where A is the accumulated amount.

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Q: What is simple interest?
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