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: SI = P * r * t, where SI is the simple interest, P is the principal, r is the rate of interest (in decimal), and t is the time in years.

Front

What does 'P' stand for in the simple interest formula?

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

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 2.5% becomes 0.025.

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What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: SI = P * r * t.

Front

If you invest $500 at a rate of 4% for 5 years, how much interest will you earn?

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You will earn $100 in interest. (SI = 500 * 0.04 * 5 = 100)

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What is the total amount to be paid back if you borrow $800 at 6% interest for 3 years?

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The total amount to be paid back is $928. (SI = 800 * 0.06 * 3 = 144; Total = 800 + 144 = 944)

Front

If the principal is $1,200 and the interest rate is 5% for 4 years, what is the simple interest?

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The simple interest is $240. (SI = 1200 * 0.05 * 4 = 240)

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What is the total amount in the account after 10 years if $2,000 is invested at 3% simple interest?

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The total amount in the account will be $2,600. (SI = 2000 * 0.03 * 10 = 600; Total = 2000 + 600 = 2600)

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What does 'r' represent in the simple interest formula?

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

Front

If you have $1,000 at a 2% interest rate for 1 year, how much interest do you earn?

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You earn $20 in interest. (SI = 1000 * 0.02 * 1 = 20)