| Interest, normally paid annually, which is earned on deposited capital. Unlike compound interest, the annual interest is not added to the capital. For example, if the capital deposited is œ1,000 and the interest rate is 8%, you would receive œ80 at the end of the first year and the same amount at the end of the second year. This contrasts with compound interest, where the œ80 interest earned on the first year would be added to the original capital, and the amount of money earning interest in the second year would be œ1,080, delivering interest of œ86.40.
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