Simple Interest

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?

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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

How do you convert a percentage to a decimal?

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To convert a percentage to a decimal, divide the percentage by 100. For example, 19.5% becomes 0.195.

Front

If you have a principal of $4,750 and a rate of 19.5% for 30 months, how do you calculate the interest?

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First, convert 30 months to years: 30 months = 2.5 years. Then use the formula: SI = P × R × T = 4750 × 0.195 × 2.5 = $2315.63.

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What is the principal amount in a Simple Interest calculation?

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The principal amount is the initial sum of money that is either invested or loaned, before any interest is applied.

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What does the term 'Rate' refer to in Simple Interest?

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The 'Rate' refers to the percentage of interest charged or earned on the principal amount, usually expressed annually.

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How do you calculate the time in years from months for Simple Interest?

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To convert months to years, divide the number of months by 12. For example, 15 months = 15/12 = 1.25 years.

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What is the Simple Interest earned on $1,500 at a rate of 19% for 15 months?

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First, convert 15 months to years: 15 months = 1.25 years. Then use the formula: SI = 1500 × 0.19 × 1.25 = $356.25.

Front

What is the total interest earned on a college fund of $8,000 at 9% for 18 years?

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Using the formula: SI = 8000 × 0.09 × 18 = $12,960.

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How do you calculate Simple Interest for a deposit?

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Use the same formula: SI = P × R × T, where P is the deposit amount, R is the interest rate, and T is the time in years.