Simple Interest

Front

What is Simple Interest?

Back

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

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: I = P × r × 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

How do you calculate the total amount after interest is applied?

Back

Total Amount = Principal + Interest.

Front

What is the principal in a Simple Interest calculation?

Back

The principal is the initial amount of money that is deposited or loaned before interest is applied.

Front

What does the interest rate represent?

Back

The interest rate represents the percentage of the principal that is paid as interest over a specific period of time.

Front

If the principal is $10,000 and the interest rate is 5% for 2 years, what is the interest?

Back

Interest = $10,000 × 0.05 × 2 = $1,000.

Front

What is the total amount if $1,500 is invested at an interest rate of 3% for 4 years?

Back

Interest = $1,500 × 0.03 × 4 = $180. Total Amount = $1,500 + $180 = $1,680.

Front

How do you find the interest rate if you know the principal, interest, and time?

Back

Rearrange the formula: Rate = Interest / (Principal × Time).

Front

What is the time period in Simple Interest calculations?

Back

The time period is the duration for which the money is invested or borrowed, usually measured in years.

Front

If you earn $200 in interest on a principal of $2,000 over 5 years, what is the interest rate?

Back

Rate = $200 / ($2,000 × 5) = 0.02 or 2%.