Simple Interest Practice

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 I = P * r * t, where I is the interest, P is the principal, r is the rate of interest per year, and t is the time in years.

Front

What does the 'P' in the simple interest formula I = P * r * t represent?

Back

The 'P' represents the Principal amount, which is the initial sum of money borrowed or invested.

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 9.5% becomes 0.095.

Front

What does the 'r' in the simple interest formula I = P * r * t represent?

Back

The 'r' represents the rate of interest per year, expressed as a decimal.

Front

What does the 't' in the simple interest formula I = P * r * t represent?

Back

The 't' represents the time in years for which the money is borrowed or invested.

Front

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

Back

You will earn $150 in interest.

Front

If the principal is $2,000, the interest rate is 4%, and the time is 5 years, what is the total interest earned?

Back

The total interest earned is $400.

Front

What is the total amount to be paid back if you borrow $3,000 at a 6% simple interest rate for 4 years?

Back

The total amount to be paid back is $3,720.

Front

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

Back

Total Amount = Principal + Interest. For example, if the principal is $1,000 and the interest is $100, the total amount is $1,100.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is I = P * r * t.