Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding. It can be calculated using the formula: Simple Interest = Principal × Rate × Time.

Front

How do you convert time from months to years in simple interest calculations?

Back

To convert time from months to years, divide the number of months by 12.

Front

If Dan borrowed $2,000 for 6 months at a 12% annual interest rate, how much interest does he owe?

Back

$120.

Front

How do you express a decimal as a percent?

Back

To express a decimal as a percent, multiply the decimal by 100 and add a percent sign. For example, 0.37 = 37%.

Front

What are the Principal and Interest in the context of simple interest?

Back

Principal is the initial amount of money borrowed or invested, and Interest is the cost of borrowing that money or the earnings from an investment.

Front

What is the formula for calculating Simple Interest?

Back

The formula is: Simple Interest = Principal × Rate × Time.

Front

If Ann puts $300 in a bank account earning 4% interest, how much interest will she earn in 1 year?

Back

$12.

Front

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

Back

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

Front

What is the annual interest rate if $120 is earned as interest on a $2,000 loan over 6 months?

Back

The annual interest rate is 12%.

Front

How do you calculate the total amount to be repaid on a loan with simple interest?

Back

Total Amount = Principal + Simple Interest.