Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount, or the original amount of money, that is deposited or borrowed. It is calculated using the formula I = PRT, where I is the interest, P is the principal, R is the rate of interest, and T is the time in years.

Front

What does the formula I = PRT represent?

Back

The formula I = PRT represents the calculation of Simple Interest, where I is the interest earned, P is the principal amount, R is the rate of interest (as a decimal), and T is the time in years.

Front

How do you convert a percentage to a decimal for calculations?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 6.17% becomes 0.0617.

Front

If Lisa's parents invested $8,000 at 9% interest for 18 years, how much interest did they earn?

Back

They earned $12,960 in interest.

Front

What does the 'P' in the formula I = PRT stand for?

Back

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

Front

What does the 'R' in the formula I = PRT represent?

Back

The 'R' represents the Rate of interest, expressed as a decimal.

Front

What does the 'T' in the formula I = PRT indicate?

Back

The 'T' indicates Time, measured in years.

Front

If Dan borrows $1200 at 8% interest for 2 years, what is the total amount he will pay back?

Back

Dan will pay back a total of $1392.

Front

How do you calculate the total amount to be paid back on a loan with simple interest?

Back

Total Amount = Principal + Interest. First, calculate the interest using I = PRT, then add it to the principal.

Front

What is the interest earned on an investment of $500 at a rate of 5% for 3 years?

Back

The interest earned is $75.