Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding. It is calculated using the formula: Interest = Principal × Rate × Time.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: Interest = Principal × Rate × Time.

Front

If you invest $1,000 at a 5% annual simple interest rate for 3 years, how much interest will you earn?

Back

Interest = $1,000 × 0.05 × 3 = $150.

Front

What is the total amount in the account after earning simple interest?

Back

Total Amount = Principal + Interest.

Front

If a loan of $2,000 is taken at a 10% simple interest rate for 4 years, how much total will be paid back?

Back

Interest = $2,000 × 0.10 × 4 = $800. Total = $2,000 + $800 = $2,800.

Front

How do you convert an annual interest rate to a monthly interest rate for simple interest calculations?

Back

To convert an annual interest rate to a monthly rate, divide the annual rate by 12.

Front

What is the principal in a simple interest calculation?

Back

The principal is the initial amount of money that is either invested or borrowed.

Front

If you have $5,000 in a savings account with a 6% simple interest rate, how much interest will you earn in 2 years?

Back

Interest = $5,000 × 0.06 × 2 = $600.

Front

What happens to the total amount if the time period is doubled in a simple interest scenario?

Back

If the time period is doubled, the interest earned will also double, resulting in a higher total amount.

Front

If you borrow $3,000 at a 4% simple interest rate for 5 years, how much interest will you owe?

Back

Interest = $3,000 × 0.04 × 5 = $600.