Simple Interest

Front

What is Simple Interest?

Back

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

Front

What is the formula for calculating Simple Interest?

Back

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 per year, and T is the time in years.

Front

If you borrow $1,000 at a rate of 5% for 2 years, what is the Simple Interest?

Back

The Simple Interest is $100. (SI = 1000 × 0.05 × 2 = $100)

Front

How do you convert months into years for Simple Interest calculations?

Back

To convert months into years, divide the number of months by 12. For example, 6 months = 6/12 = 0.5 years.

Front

What is the principal amount in a Simple Interest problem?

Back

The principal amount is the initial sum of money borrowed or invested before interest is applied.

Front

How do you find the rate of interest if you know the Simple Interest, Principal, and Time?

Back

You can find the rate of interest using the formula: R = SI / (P × T).

Front

If you earn $200 in Simple Interest on a $1,000 investment over 4 years, what is the rate of interest?

Back

The rate of interest is 5%. (R = 200 / (1000 × 4) = 0.05 or 5%)

Front

What is the time period in Simple Interest calculations?

Back

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

Front

If you invest $2,000 at a rate of 3% for 5 years, how much interest will you earn?

Back

You will earn $300 in interest. (SI = 2000 × 0.03 × 5 = $300)

Front

What is the total amount after earning Simple Interest?

Back

The total amount is the sum of the principal and the Simple Interest earned. Total Amount = Principal + Simple Interest.