Simple interest

Front

What is simple interest?

Back

Simple interest is a method of calculating the interest charged or earned on a principal amount over a specific period of time, typically expressed as a percentage.

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 (as a decimal), and t is the time in years.

Front

If you deposit $1000 at a 5% interest rate for 3 years, how much interest will you earn?

Back

You will earn $150 in interest.

Front

What does P stand for in the simple interest formula?

Back

P stands for the principal amount, which is the initial sum of money deposited or borrowed.

Front

What does r stand for in the simple interest formula?

Back

r stands for the rate of interest, expressed as a decimal.

Front

What does t stand for in the simple interest formula?

Back

t stands for the time the money is invested or borrowed, measured in years.

Front

If you earned $200 in interest on a principal of $1000 over 4 years, what was the interest rate?

Back

The interest rate was 5%.

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100.

Front

What is the interest earned on a $500 deposit at a 4% interest rate for 2 years?

Back

The interest earned is $40.

Front

If the interest earned is $60 and the principal is $1200, what is the interest rate?

Back

The interest rate is 2.5%.