AMDM: Simple Interest (solve for I, P, r, & t)

Front

What is the formula for calculating Simple Interest?

Back

I = P * r * t, where I is interest, P is principal, r is rate (as a decimal), and t is time (in years).

Front

How do you convert a percentage to a decimal?

Back

Divide the percentage by 100. For example, 7.25% becomes 0.0725.

Front

If Leroy borrowed $1500 at an annual simple interest rate of 12% and paid $270 in interest, how do you find the time period?

Back

Use the formula I = P * r * t. Rearranging gives t = I / (P * r).

Front

What is the principal amount if you know the interest, rate, and time?

Back

Rearrange the simple interest formula to find P: P = I / (r * t).

Front

If you lend $240 and your friend pays you back $270, how do you calculate the interest rate charged?

Back

Use the formula r = I / (P * t). Here, I = $30, P = $240, and t = 1 year.

Front

What is the total amount to be repaid if Maria borrowed $3,000 at a simple interest rate of 4% for 4 years?

Back

Total amount = Principal + Interest. Interest = P * r * t = $3,000 * 0.04 * 4 = $480. Total = $3,000 + $480 = $3,480.

Front

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

Back

Use the formula I = P * r * t, where P is the principal, r is the interest rate, and t is the time in years.

Front

What is the time period if you put $197 into a savings account with a 5% interest rate and earned $49.25 in interest?

Back

Rearranging the formula gives t = I / (P * r). Here, t = $49.25 / ($197 * 0.05) = 5 years.

Front

What does 'principal' mean in the context of simple interest?

Back

Principal is the initial amount of money borrowed or invested before interest.

Front

What is 'interest' in financial terms?

Back

Interest is the cost of borrowing money or the earnings from an investment, usually expressed as a percentage.