Simple interest

Front

What is simple interest?

Back

Simple interest is the interest calculated on the principal amount only, without compounding. It is typically calculated using the formula I = P * r * t.

Front

What does P stand for in the simple interest formula?

Back

P stands for the principal amount, which is the initial sum of money deposited or borrowed.

Front

What does r represent in the simple interest formula?

Back

r represents the interest rate, expressed as a decimal.

Front

What does t represent in the simple interest formula?

Back

t represents the time the money is deposited or borrowed for, usually in years.

Front

What is the formula for calculating simple interest?

Back

The formula for calculating simple interest is I = P * r * t.

Front

If you deposit $1000 at an interest rate of 5% for 3 years, how much interest will you earn?

Back

You will earn $150 in interest.

Front

If you borrow $2000 at an interest rate of 6% for 4 years, how much interest will you pay?

Back

You will pay $480 in interest.

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.

Front

If Lisa earned $20 in interest after 1 year at a 5% interest rate, how much did she deposit?

Back

Lisa deposited $400.

Front

What is the total amount after earning simple interest?

Back

The total amount is the principal plus the interest earned: Total = P + I.