Simple Interest

Front

What is simple interest?

Back

Simple interest is a method of calculating the interest charge on a loan or the interest earned on an investment based on the principal amount, the interest rate, and the time period.

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 7.5% becomes 0.075.

Front

What is the formula for calculating simple interest?

Back

The formula for calculating simple interest is: I = PRT, where I is the interest, P is the principal amount, R is the rate (as a decimal), and T is the time in years.

Front

What does 'P' represent in the simple interest formula?

Back

'P' represents the principal amount, which is the initial sum of money invested or loaned.

Front

What does 'R' represent in the simple interest formula?

Back

'R' represents the rate of interest, expressed as a decimal.

Front

What does 'T' represent in the simple interest formula?

Back

'T' represents the time the money is invested or borrowed, measured in years.

Front

If you invest $1000 at a 5% interest rate for 2 years, how much interest will you earn?

Back

You will earn $100 in interest. (I = PRT = 1000 * 0.05 * 2 = 100)

Front

How do you calculate the total amount after earning simple interest?

Back

The total amount after earning simple interest can be calculated using the formula: A = P + I, where A is the total amount, P is the principal, and I is the interest earned.

Front

What is the total amount if you invest $500 at a 4% interest rate for 3 years?

Back

The total amount will be $620. (I = 500 * 0.04 * 3 = 60; A = 500 + 60 = 620)

Front

How do you find the interest earned if you know the total amount and the principal?

Back

To find the interest earned, subtract the principal from the total amount: I = A - P.