Simple interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding. It is calculated using the formula I = P * r * t.

Front

What does the variable 'P' represent in the simple interest formula I = P * r * t?

Back

'P' represents the Principal amount, which is the initial sum of money borrowed or invested.

Front

What does the variable 'r' represent in the simple interest formula I = P * r * t?

Back

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

Front

What does the variable 't' represent in the simple interest formula I = P * r * t?

Back

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

Front

Calculate the simple interest for a principal of $500 at a rate of 4% for 5 years.

Back

I = P * r * t = 500 * 0.04 * 5 = $100.

Front

If you have a principal of $1000 and an interest rate of 3% for 2 years, how much interest will you earn?

Back

I = P * r * t = 1000 * 0.03 * 2 = $60.

Front

What is the total amount to be paid back if you borrow $800 at 5% simple interest for 3 years?

Back

Total Amount = Principal + Interest = 800 + (800 * 0.05 * 3) = $800 + $120 = $920.

Front

If you pay your loan monthly, how many times a year must you make your payment?

Back

12 times a year.

Front

What is the formula to calculate total amount after interest is added?

Back

Total Amount = Principal + Interest.

Front

If you invest $2000 at an interest rate of 6% for 4 years, what is the simple interest earned?

Back

I = P * r * t = 2000 * 0.06 * 4 = $480.