How the calculation works
Simple Interest Calculator explained
Simple interest is calculated only on the original principal. Prior interest does not become part of the balance used for future interest.
For a daily calculation, convert the annual rate to a daily rate using the contract’s day-count basis, then multiply by the principal and number of days.
This method is common for short-term notes, per-diem payoff interest, and educational examples, but an actual contract may specify different timing and rounding rules.