Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount, or the original amount of money, over a specific period of time at a fixed interest rate.

Front

What is the formula for calculating Simple Interest?

Back

The formula for Simple Interest is: SI = P * r * t, where SI is the simple interest, P is the principal amount, r is the rate of interest per year (in decimal), and t is the time in years.

Front

If you deposit $500 at an interest rate of 10% for 2 years, what is the Simple Interest?

Back

SI = 500 * 0.10 * 2 = $100.

Front

What is the principal in a Simple Interest calculation?

Back

The principal is the initial amount of money that is either deposited or borrowed before interest is applied.

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, 10% becomes 0.10.

Front

If a loan of $1,500 has a Simple Interest of $356.25, what is the interest rate if the loan is for 15 months?

Back

First, convert 15 months to years: 15/12 = 1.25 years. Then use the formula: r = SI / (P * t) = 356.25 / (1500 * 1.25) = 0.19 or 19%.

Front

What is the total amount in the account after earning Simple Interest?

Back

The total amount is calculated as: Total Amount = Principal + Simple Interest.

Front

If you earn $800 in Simple Interest on a principal of $2,000 over 5 years, what is the interest rate?

Back

Using the formula: r = SI / (P * t) = 800 / (2000 * 5) = 0.08 or 8%.

Front

What is the time period in years if you earn $270 in Simple Interest on a loan of $750 at an 18% interest rate?

Back

Using the formula: t = SI / (P * r) = 270 / (750 * 0.18) = 2 years.

Front

How does the time period affect Simple Interest?

Back

The longer the time period, the more Simple Interest will accumulate, as it is directly proportional to time.