What type of interest calculation is done only on the principal amount?

The type of interest calculation that is done only on the principal amount is simple interest. This means that the interest earned or paid is calculated solely based on the initial amount of money invested or borrowed, without consideration of any interest that has previously been added to the principal.

In practical terms, if you have a principal amount and a fixed interest rate, simple interest allows you to easily calculate how much interest will accumulate over time. It is typically calculated using the formula:

Interest = Principal x Rate x Time

This straightforward approach is beneficial for short-term loans or investments where the calculation of interest does not need to involve more complex compounding aspects.

In contrast, compound interest involves interest being calculated on the initial principal as well as on the accumulated interest from previous periods, which can lead to greater total interest over time. Other options like strategic interest and projected interest are not standard terms used in the context of interest calculations and do not apply to this concept.