Which of the following refers to simple interest?Immersive Reader

Interest earned only on the original principal amount invested.

Interest earned on the reinvestment of previous interest payments.

The process of accumulating interest in an investment over time to earn more interest.

The current value of future cash flows discounted at the appropriate discount rate.

Interest earned on both the initial principal and the interest reinvested from prior periods.

Simple Interest is the interest calculated on the original principal amount. Compound interest is the interest calculated on the original principal amount and also on the interest received from the previous periods and which is reinvested.

Hence, as given in the first line of the question, Simple Interest refers to the interest earned only on the original principal amount invested.

The other statements given in the question are not true for simple interest because:

Interest earned on the reinvestment of previous interest payments is called compound interest and not simple interest.

The process of accumulating interest in an investment over time to earn more interest is called compounding of interest

The current value of future cash flows discounted at the appropriate discount rate is called as the present value of cash flows.

Interest earned on both the initial principal and the interest reinvested from prior periods is called as compound interest.