Simple interest is the amount of interest charged on the face value of the security and that does not accumulate over time for compounding. If you have a 10 years national saving certificate of $10,000 which pays a 12% per annum simple interest every six months. The amount of interest is credited to your account every six months.
In the above example the simple interest will be calculated as follows:
Principal amount = $10,000
Simple interest = $10,000 x 12% x 6 / 12 = $600
Total simple interest = $ 600 x 2 x 10 years = $12,000
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