Simple Interest HW Assignment

Front

What is Simple Interest?

Back

Simple Interest is a method of calculating the interest charge on a loan or financial product. It is calculated using the formula: Interest = Principal x Rate x Time.

Front

What is the formula for calculating Simple Interest?

Back

The formula for Simple Interest is: I = P x r x t, where I is the 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 $1,000 at a 5% simple interest rate for 3 years, how much interest will you earn?

Back

Interest = 1000 x 0.05 x 3 = $150.

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 before interest.

Front

How does the time period affect simple interest?

Back

The longer the time period, the more interest will accumulate, as interest is calculated for each year the money is invested or borrowed.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any interest that has already been added.

Front

If a loan of $2,000 has a simple interest rate of 4% for 5 years, what is the total amount to be paid back?

Back

Total Amount = Principal + Interest = 2000 + (2000 x 0.04 x 5) = $2,400.

Front

What is the rate of interest in a simple interest problem?

Back

The rate of interest is the percentage at which interest is calculated on the principal amount, usually expressed as an annual rate.

Front

How much interest will you earn on $500 at a 3% simple interest rate after 10 years?

Back

Interest = 500 x 0.03 x 10 = $150.

Front

If you borrow $1,500 at a simple interest rate of 6% for 4 years, how much interest will you pay?

Back

Interest = 1500 x 0.06 x 4 = $360.