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: Simple Interest = Principal × Rate × Time.

Front

How do you convert months to years?

Back

To convert months to years, divide the number of months by 12. For example, 18 months is equal to 18 ÷ 12 = 1.5 years.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: SI = P × R × T, where SI is Simple Interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

Front

If you invest $1,400 at an interest rate of 4% for 5 years, what is the Simple Interest earned?

Back

Simple Interest = 1400 × 0.04 × 5 = $280.

Front

What is the total amount to be paid back if you borrow $1,200 at 8% interest for 2 years?

Back

Total Amount = Principal + Simple Interest = 1200 + (1200 × 0.08 × 2) = $1,392.

Front

How much interest is earned on $8,000 at 9% over 18 years?

Back

Interest = 8000 × 0.09 × 18 = $12,960.

Front

What is the principal amount in a Simple Interest problem?

Back

The principal amount is the initial sum of money that is invested or borrowed before interest is applied.

Front

What does the rate in Simple Interest represent?

Back

The rate in Simple Interest represents the percentage of the principal that is paid as interest over a specific period, usually expressed annually.

Front

How do you calculate the total balance after earning Simple Interest?

Back

Total Balance = Principal + Simple Interest.

Front

If Caiden earned $475 and deposited it at 3.8% interest for 15 years, what will be his balance?

Back

Simple Interest = 475 × 0.038 × 15 = $270.75. Total Balance = 475 + 270.75 = $745.75.