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 I = PRT, 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

What does the formula I = PRT represent?

Back

In the formula I = PRT, I represents the interest earned or paid, P is the principal amount, R is the annual interest rate (in decimal), and T is the time in years.

Front

How do you convert months to years?

Back

To convert months to years, divide the number of months by 12. For example, 9 months is 9/12 = 0.75 years.

Front

If Mark took out a loan of $25,690 at a simple interest rate of 5.2% for 5 years, how much interest will he pay?

Back

The interest paid will be $6,679.40, calculated as I = PRT = 25690 * 0.052 * 5.

Front

What does the 'P' in the formula I = PRT stand for?

Back

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

Front

Ethan borrowed $2,190 at a simple interest rate of 2.5% for 3 years. How much interest will he pay?

Back

Ethan will pay $164.25 in interest, calculated as I = PRT = 2190 * 0.025 * 3.

Front

Emilio borrows $1200 at 8% simple interest per year. How much will he have to pay back in total after 2 years?

Back

Emilio will have to pay back a total of $1392, calculated as Total = Principal + Interest = 1200 + (1200 * 0.08 * 2).

Front

What is the difference between Simple Interest and Compound Interest?

Back

Simple Interest is calculated only on the principal amount, while Compound Interest is calculated on the principal plus any interest that has already been added.

Front

How do you calculate the total amount to be paid back on a loan with simple interest?

Back

Total Amount = Principal + Interest, where Interest is calculated using I = PRT.

Front

What is the annual interest rate in decimal form if the rate is 5%?

Back

The annual interest rate in decimal form is 0.05 (5% divided by 100).