7.3 Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is a method of calculating the interest charge on a loan or financial product, based on the original principal amount and a fixed interest rate over a specified period of time.

Front

Formula for 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 (in decimal), and t is the time (in years).

Front

Convert 7.25% to a decimal.

Back

0.0725

Front

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

Back

$150

Front

What is the principal in a simple interest calculation?

Back

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

Front

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

Back

Total Amount = Principal + Interest.

Front

If a loan of $2,000 is taken at a 4% interest rate for 5 years, what is the total interest paid?

Back

$400

Front

What is the time period in years if a person is currently 12 years old and will be able to access their inheritance at 21?

Back

9 years.

Front

Calculate the interest earned on a principal of $800 at an interest rate of 3.5% over 6 months.

Back

$14.

Front

What is the interest owed on a credit card balance of $1,583 at an 8.8% interest rate after 3 years?

Back

$417.91.