3.6 Simple Interest Problems

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding. It can be calculated using the formula: Simple Interest = Principal × Rate × Time.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: SI = P × R × T, where SI is Simple Interest, P is the principal amount, R is the rate of interest (in decimal), and T is the time (in years).

Front

If you deposit $225 at a rate of 1.5% for 2 years, what is the Simple Interest?

Back

The Simple Interest is $6.75.

Front

How much interest is earned on a deposit of $8,000 at 9% for 18 years?

Back

The interest earned is $12,960.

Front

What is the principal amount in a Simple Interest problem?

Back

The principal amount is the initial sum of money that is invested or loaned, on which interest is calculated.

Front

If a loan of $750 has an 18% interest rate for 2 years, what is the Simple Interest?

Back

The Simple Interest is $270.

Front

How do you convert a percentage rate to a decimal for calculations?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 10% becomes 0.10.

Front

What is the Simple Interest earned on $500 at 10% for 8 months?

Back

The Simple Interest earned is $33.50.

Front

If you invest $2,000 at an 8% interest rate for 5 years, what is the Simple Interest?

Back

The Simple Interest is $800.

Front

What does 'Time' refer to in the context of Simple Interest?

Back

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