Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is a method of calculating the interest charge on a loan or financial product. It is calculated using the formula: Interest = Principal × Rate × Time.

Front

What is the formula for calculating Simple Interest?

Back

The formula for Simple Interest is: I = P × r × t, where I is the interest, P is the principal amount, r is the rate of interest per year, and t is the time in years.

Front

If you invest $1,000 at a 5% interest rate for 3 years, how much interest will you earn?

Back

Interest = 1000 × 0.05 × 3 = $150.

Front

What does 'Principal' mean in the context of Simple Interest?

Back

Principal refers to the initial amount of money that is invested or loaned before interest.

Front

What does 'Rate' mean in the context of Simple Interest?

Back

Rate refers to the percentage of interest charged or earned on the principal amount, typically expressed as an annual rate.

Front

What does 'Time' mean in the context of Simple Interest?

Back

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

Front

Calculate the Simple Interest on $2,500 at 6% for 4 years.

Back

Interest = 2500 × 0.06 × 4 = $600.

Front

How much interest will you earn on $5,200 at 13.5% for 1.5 years?

Back

Interest = 5200 × 0.135 × 1.5 = $1,053.

Front

If you borrow $300 at 7.5% for 5 years, how much interest will you pay?

Back

Interest = 300 × 0.075 × 5 = $112.50.

Front

What is the total amount to be paid back if you borrow $12,500 at 8.5% for 1.5 years?

Back

Total Amount = Principal + Interest = 12500 + (12500 × 0.085 × 1.5) = $14,093.75.