Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount, or the original amount of money borrowed or invested, without compounding.

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, r is the rate of interest per year, and t is the time in years.

Front

What does 'P' represent in the Simple Interest formula?

Back

In the Simple Interest formula, 'P' represents the principal amount, which is the initial sum of money borrowed or invested.

Front

What does 'r' represent in the Simple Interest formula?

Back

In the Simple Interest formula, 'r' represents the annual interest rate expressed as a decimal.

Front

What does 't' represent in the Simple Interest formula?

Back

In the Simple Interest formula, 't' represents the time in years for which the money is borrowed or invested.

Front

If Anna invests $2,500 at an annual rate of 5%, how much interest will she earn in 9 years?

Back

$1,125

Front

How much interest will Allison earn from a $50,000 inheritance at 2% interest by her 21st birthday?

Back

$9,000

Front

What is the principal amount in the context of Simple Interest?

Back

The principal amount is the initial sum of money that is either borrowed or invested.

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 plus any interest that has already been added.

Front

If Jerry borrowed $4,000 for 5 years at a 6% interest rate, how much interest does he owe?

Back

$1,200