Simple interest

Front

What is the formula for simple interest?

Back

I = P * r * t

Front

If Lisa earned $20 in interest after 1 year at a 5% interest rate, how much did she deposit?

Back

$400

Front

What does the 'r' stand for in the simple interest equation?

Back

Rate (% as decimal)

Front

How much interest will Howard pay if he borrows $4,000 at an 8% interest rate for 2 years?

Back

$640

Front

What does the 'I' stand for in the simple interest equation?

Back

Interest ($)

Front

What is the principal amount in a simple interest calculation?

Back

The initial amount of money deposited or borrowed.

Front

How do you convert a percentage to a decimal for use in the simple interest formula?

Back

Divide the percentage by 100.

Front

What is the time period in the simple interest formula?

Back

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

Front

If the interest earned is $100, the principal is $1,000, and the time is 2 years, what is the interest rate?

Back

5% (using I = P * r * t) => r = I / (P * t) = 100 / (1000 * 2) = 0.05.

Front

What happens to the interest earned if the principal amount increases?

Back

The interest earned increases, assuming the rate and time remain constant.