why is simple interest simple 
 simple interest refers to the straightforward crediting of cash flows associated with some investment or deposit for instance 1 annual simple interest would credit 1 for every 100 invested year after year simple interest does not however take into account the power of compounding or interest on interest where after the first year the 1 would actually be earned on the 101 balance adding up to 1 01 the next year the 1 would be earned on 102 01 amounting to 1 02 and so one 