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: SI = P * r * t, where SI is the simple interest, P is the principal amount, r is the rate of interest per year (in decimal), and t is the time in years.

Front

What is the formula for calculating Simple Interest?

Back

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

Front

If the principal is $2,000, the rate is 8%, and the time is 5 years, what is the Simple Interest?

Back

$800.

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, 8% becomes 0.08.

Front

What is the Simple Interest earned on $350 at a rate of 2.5% for 3 years?

Back

$26.25.

Front

What must you do to the interest rate before using it in the Simple Interest formula?

Back

You must convert the interest rate from a percentage to a decimal.

Front

If Dan borrowed $2,000 for 6 months at a 12% annual interest rate, how much interest does he owe?

Back

$120.

Front

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

Back

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

Front

What does 'time' refer to in the Simple Interest formula?

Back

'Time' refers to the duration for which the money is borrowed or invested, usually expressed in years.

Front

How do you calculate the total amount to be repaid including Simple Interest?

Back

Total Amount = Principal + Simple Interest.