Simple Interest

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What is Simple Interest?

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Simple Interest is a method of calculating the interest charge on a loan or financial investment. 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.

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How do you convert a percentage to a decimal?

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To convert a percentage to a decimal, divide the percentage by 100. For example, 2.5% becomes 0.025.

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What does the 'P' in the simple interest formula stand for?

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The 'P' in the simple interest formula stands for Principal, which is the initial amount of money borrowed or invested.

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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.

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If the principal is $500, the interest rate is 4%, and the time is 5 years, what is the simple interest?

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The simple interest is $100. (SI = 500 * 0.04 * 5 = 100)

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What does the 't' in the simple interest formula represent?

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The 't' in the simple interest formula represents the time the money is borrowed or invested, measured in years.

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If you have a principal of $1000 and an interest rate of 5% for 3 years, how much total will you have after 3 years?

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You will have $1150 after 3 years. (Total = Principal + Interest = 1000 + (1000 * 0.05 * 3) = 1150)

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What is the total amount to be paid back if you borrow $800 at a 6% interest rate for 4 years?

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The total amount to be paid back is $1024. (Total = Principal + Interest = 800 + (800 * 0.06 * 4) = 1024)

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What is the relationship between Principal and Interest?

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Principal and Interest are always expressed in money. Principal is the original sum of money, while Interest is the cost of borrowing that money.

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

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To calculate the total amount after interest is applied, use the formula: Total Amount = Principal + Simple Interest.