Simple Interest

Front

What is simple interest?

Back

Simple interest is a method of calculating the interest charge on a loan or financial product, where the interest is calculated only on the principal amount, or the initial amount of money, rather than on the interest that accumulates over time.

Tags

CCSS.7.RP.A.3

Front

What is the formula for calculating simple interest?

Back

The formula for calculating simple interest is: I = P * r * t, where I is the interest, P is the principal amount, r is the rate of interest (in decimal), and t is the time (in years).

Tags

CCSS.7.RP.A.3

Front

How do you convert a percentage to a decimal for calculations?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 19% becomes 0.19.

Front

If a loan of $1,500 is taken at a rate of 19% for 15 months, how do you calculate the simple interest?

Back

First, convert 15 months to years (15/12 = 1.25 years). Then use the formula: I = P * r * t = 1500 * 0.19 * 1.25 = $356.25.

Tags

CCSS.7.RP.A.3

Front

What is the total amount to be paid back on a loan?

Back

The total amount to be paid back on a loan is the sum of the principal and the interest. It can be calculated as: Total Amount = Principal + Interest.

Tags

CCSS.7.RP.A.3

Front

How do you find the interest earned on a deposit?

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To find the interest earned on a deposit, use the simple interest formula: I = P * r * t, where P is the principal amount, r is the interest rate (in decimal), and t is the time in years.

Tags

CCSS.6.EE.B.6

Front

What is the interest earned on a deposit of $225 at a rate of 1.5% over 2 years?

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Using the formula: I = P * r * t = 225 * 0.015 * 2 = $6.75.

Tags

CCSS.7.RP.A.3

Front

How do you determine the interest rate from the total interest paid on a loan?

Back

To determine the interest rate, rearrange the simple interest formula: r = I / (P * t). Calculate using the total interest paid, principal, and time.

Tags

CCSS.6.EE.B.7

Front

If Kermit paid $1,870 in interest on a $5,500 loan over 4 years, what was his interest rate?

Back

Using the formula: r = I / (P * t) = 1870 / (5500 * 4) = 0.085 or 8.5%.

Front

What is the significance of the time period in calculating simple interest?

Back

The time period is crucial in calculating simple interest as it directly affects the amount of interest earned or paid. Interest is typically calculated on an annual basis.

Tags

CCSS.7.RP.A.3