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 the Principal is $800, the Interest Rate is 3.5%, and the Time is 6 months, what is the interest earned?

Back

The interest earned is $14.

Front

How do you convert time in months to years for calculating Simple Interest?

Back

To convert months to years, divide the number of months by 12.

Front

If Anna invested $2,500 at an annual rate of 5%, how long will it take until she earns $1,125 in interest?

Back

It will take Anna 9 years to earn $1,125 in interest.

Front

What is the Principal in the context of Simple Interest?

Back

The Principal is the initial amount of money that is invested or borrowed before interest.

Front

If Jerry borrowed $4,000 for 5 years at a 6% simple interest rate, how much interest does he owe?

Back

Jerry owes $1,200 in interest.

Front

What is the effect of increasing the Principal on Simple Interest?

Back

Increasing the Principal will increase the Simple Interest earned or owed, as interest is directly proportional to the Principal.

Front

If the Principal is $2,000, the rate is 8%, and the time is 5 years, what is the Simple Interest earned?

Back

The Simple Interest earned is $800.

Front

What happens to Simple Interest if the Interest Rate is doubled?

Back

If the Interest Rate is doubled, the Simple Interest earned will also double, assuming the Principal and Time remain constant.