This is "simple interest", i.e. interest each month on the $100,000 principal at a rate of 7.5%. The parties might agree to the payment of "compound interest", i.e. interest on the sum of principal plus previously accumulated interest. For example, if interest were compounded monthly, the interest accumulating in the second month would be 7.5% of $100,000 + $625 = $628.90, etc.