Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding.

Front

What is the formula for calculating Simple Interest?

Back

The formula is I = P * r * t, where I is the interest, P is the principal, r is the rate of interest per year, and t is the time in years.

Front

If John borrowed $400 for 9 months at a rate of 15%, how much interest will he pay?

Back

$15 (calculated as I = 400 * 0.15 * (9/12))

Front

What does 'P' stand for in the Simple Interest formula?

Back

P stands for Principal, which is the initial amount of money borrowed or invested.

Front

What does 'I' stand for in the Simple Interest formula?

Back

I stands for Interest, which is the amount paid for the use of borrowed money.

Front

If Jenna borrowed $5,000 for 3 years and paid $1,350 in interest, what was her interest rate?

Back

9% (calculated as r = I / (P * t) = 1350 / (5000 * 3))

Front

What is the time period in the Simple Interest formula?

Back

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

Front

How do you convert months into years for the Simple Interest calculation?

Back

To convert months into years, divide the number of months by 12.

Front

If the principal is $500, the interest rate is 5% per year, and the time is 5 years, what is the total interest earned?

Back

$125 (calculated as I = 500 * 0.05 * 5)

Front

What is the total amount owed after borrowing $400 for 9 months at 15% interest?

Back

$445 (Total amount = Principal + Interest = 400 + 45)