Simple Interest

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What is Simple Interest?

Back

Simple Interest is a method of calculating the interest charge on a loan or financial investment. It is calculated using the formula: Interest = Principal x Rate x Time.

Tags

CCSS.7.RP.A.3

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What is the formula for calculating Simple Interest?

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The formula for calculating Simple Interest is: I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

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CCSS.7.RP.A.3

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If you invest $1,000 at a 5% simple interest rate for 3 years, how much interest will you earn?

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You will earn $150 in interest. (I = 1000 x 0.05 x 3 = $150)

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CCSS.7.RP.A.3

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What does the term 'Principal' refer to in finance?

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Principal refers to the original sum of money borrowed or invested, excluding any interest or profits.

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CCSS.7.RP.A.3

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What is the 'Rate' in the context of Simple Interest?

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The 'Rate' is the percentage at which interest is calculated on the principal amount, usually expressed as an annual rate.

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CCSS.7.RP.A.3

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How does time affect Simple Interest?

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The longer the time period, the more interest will accumulate, as interest is calculated for each year the principal is invested or borrowed.

Tags

CCSS.7.RP.A.3

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What is the total amount after earning Simple Interest?

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The total amount after earning Simple Interest can be calculated as: Total Amount = Principal + Interest.

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CCSS.HSF.BF.A.2

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If you borrow $2,000 at a 6% simple interest rate for 4 years, what will be the total amount to be repaid?

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The total amount to be repaid will be $2,480. (Interest = 2000 x 0.06 x 4 = $480; Total = 2000 + 480 = $2480)

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CCSS.7.RP.A.3

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What is APR in finance?

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APR stands for Annual Percentage Rate, which is the annual rate charged for borrowing or earned through an investment.

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CCSS.6.RP.A.3C

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How do you calculate the interest earned on a savings account with Simple Interest?

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To calculate the interest earned, use the formula: Interest = Principal x Rate x Time.

Tags

CCSS.7.RP.A.3