Simple Interest

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What is Simple Interest?

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Simple Interest is the interest calculated on the principal amount only, without compounding. It is given by the formula: I = P * r * t, where I is the interest, P is the principal, r is the rate of interest, and t is the time in years.

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How do you convert months to years?

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To convert months to years, divide the number of months by 12. For example, 18 months is 18/12 = 1.5 years.

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What does 'P' stand for in the simple interest formula?

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'P' stands for Principal, which is the initial amount of money borrowed or invested.

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What does 'r' represent in the simple interest formula?

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'r' represents the rate of interest, usually expressed as a percentage.

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What does 't' represent in the simple interest formula?

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't' represents the time the money is borrowed or invested, expressed in years.

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Calculate the simple interest for a principal of $2,000 at a rate of 12% for 6 months.

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Simple Interest (I) = P * r * t = 2000 * 0.12 * (6/12) = $120.

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What is the formula for calculating Simple Interest?

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The formula for calculating Simple Interest is I = P * r * t.

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How do you convert a decimal to a percent?

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To convert a decimal to a percent, multiply the decimal by 100 and add a percent sign. For example, 0.37 = 0.37 * 100 = 37%.

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If you have a principal of $1,000 and a rate of 5% for 2 years, what is the simple interest?

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Simple Interest (I) = P * r * t = 1000 * 0.05 * 2 = $100.

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What is the difference between Simple Interest and Compound Interest?

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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.