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, usually 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 $500 at a 4% interest rate for 3 years, how much interest will you earn?

Back

$60

Front

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

Back

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

Front

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

Back

r represents the rate of interest, expressed as a decimal.

Front

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

Back

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

Front

If Lisa earned $20 in interest after 1 year at a 5% interest rate, how much did she deposit?

Back

$400

Front

Howard borrowed $4,000 at an 8% interest rate for 2 years. How much interest will he pay?

Back

$640

Front

If Amy deposits $200 for 5 years at a 5% interest rate, how much interest does she earn?

Back

$50

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal and also on the interest that has been added to it.