When we borrow money we are expected to pay
for using it - this is called interest.
Simple Interest is charged only on
the original principal, not on the interest accrued.
There are three components to calculate simple
interest: principal (the amount of money borrowed), interest
rate and time.
I = P x R x T
Where I = Simple Interest, P = Principal,
R = interest rate (per year) T = time (in years)