Simple Interest

The formula for calculating simple interest is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

You will earn $100 in interest. (I = 500 * 0.04 * 5 = 100)

The total amount is calculated as A = P + I, where A is the total amount, P is the principal, and I is the interest earned.

To convert a percentage to a decimal, divide the percentage by 100. For example, 5% becomes 0.05.

Principal refers to the initial amount of money that is invested or borrowed before any interest is applied.

The total amount to be paid back is $1,180. (Interest = 1000 * 0.06 * 3 = 180; Total = 1000 + 180 = 1180)

In simple interest calculations, the interest earned is directly proportional to the principal amount and the time period for which the money is invested or borrowed.

To calculate the total balance, use the formula A = P + I, where I is calculated using I = PRT.

Increasing the interest rate will increase the total interest earned, assuming the principal and time remain constant.

The interest rate is 3.75%. (I = PRT; 120 = 800 * R * 4; R = 120 / (800 * 4) = 0.0375 or 3.75%)