Interest paid on a loan is calculated as a percentage of the
O principal.
O amount owed.
O compounded principal.
O collateral.

The interest paid on a loan is calculated as a percentage of the PRINCIPAL.The principal amount is the amount received by a debtor when they made the loan agreement with a creditor. The interest paid by the debtor is the creditor's profit from giving the loan which calculated as a percentage of the principal amount given.