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.

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What is the formula for calculating Simple Interest?

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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 (in decimal), and T is the time (in years).

Front

If you borrow $1,500 at a rate of 19% for 15 months, how do you calculate the interest?

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Convert 15 months to years (15/12 = 1.25 years). Then use the formula: SI = 1500 × 0.19 × 1.25 = $356.25.

Front

How much interest do you earn on a deposit of $575 for 3 months at 2.88%?

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Convert 3 months to years (3/12 = 0.25 years). Then use the formula: SI = 575 × 0.0288 × 0.25 = $4.14.

Front

What is the principal amount in the context of Simple Interest?

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The principal amount is the initial sum of money borrowed or invested, before any interest is added.

Front

How do you convert months into years for interest calculations?

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

Front

If you have a loan of $750 at an 18% interest rate for 2 years, what is the Simple Interest?

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Use the formula: SI = 750 × 0.18 × 2 = $270.

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What is the rate of interest in Simple Interest calculations?

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

Front

Calculate the Simple Interest on a deposit of $225 at a rate of 1.5% over 2 years.

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SI = 225 × 0.015 × 2 = $6.75.

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What is the time period in Simple Interest calculations?

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