
Quoting
adjusterjack
When you can't find a statute you go to case law.
Here's one from the Massachusetts Court of Appeals that says:
"On the second point, relative to the compounding of interest: such compounding cannot be done in the absence of express agreement. The note in this case called for payment of $40,000, "with interest at the rate of seven percent (7%) per annum within one year from this date in the following manner. Interest payments of $700.00 are to be paid each quarter beginning on February 25, 1971 and the principal is to be paid on November 24, 1971." The $700 quarterly interest payments represented simple interest. Nothing suggests compounding. Without express agreement interest is not due on overdue interest. Shapiro v. Bailen, 293 Mass. 121, 123-124 (1936).".