Simple Interest

Front

What is Simple Interest?

Back

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

Front

How do you calculate Simple Interest?

Back

Simple Interest = Principal × Rate × Time.

Front

What does Principal mean in Simple Interest?

Back

Principal is the original amount of money borrowed or invested.

Front

What is the Rate in Simple Interest?

Back

Rate is the percentage of interest charged on the principal per year.

Front

What does Time represent in Simple Interest?

Back

Time is the duration for which the money is borrowed or invested, usually in years.

Front

If you have $1,000 at a 5% interest rate for 2 years, how much interest do you earn?

Back

$1000 × 0.05 × 2 = $100.

Front

If you borrow $2,000 at a 3% interest rate for 4 years, how much interest do you pay?

Back

$2000 × 0.03 × 4 = $240.

Front

What is the total amount to be paid back if you borrow $1,500 at 4% for 3 years?

Back

Total Amount = Principal + Interest = $1500 + ($1500 × 0.04 × 3) = $1800.

Front

How do you convert months into years for Simple Interest calculations?

Back

Divide the number of months by 12.

Front

If you have $500 at a 6% interest rate for 5 years, how much interest do you earn?

Back

$500 × 0.06 × 5 = $150.