Simple Interest

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 per year, and t is the time in years.

This formula represents the calculation of Simple Interest, where I is the interest earned, P is the principal amount, r is the annual interest rate (in decimal), and t is the time in years.

$150. (I = 1000 * 0.05 * 3 = 150)

The principal is the initial amount of money that is invested or borrowed before any interest is applied.

To convert a percentage to a decimal, divide the percentage by 100. For example, 5% becomes 0.05.

$2,160. (Total Amount = Principal + Interest = 2000 + (2000 * 0.04 * 2) = 2160)

The 't' stands for time, which is the duration for which the money is borrowed or invested, measured in years.

5%. (I = P * r * t; 200 = 1000 * r * 4; r = 200 / (1000 * 4) = 0.05 or 5%)

$1,000. (Total Amount = 500 + (500 * 0.10 * 5) = 1000)

$540. (I = 3000 * 0.03 * 6 = 540)