Simple Interest

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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 I = prt, where I is the interest, p is the principal, r is the rate of interest, and t is the time in years.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is I = prt.

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If you deposit $300 at an interest rate of 4% for 1 year, how much interest will you earn?

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You will earn $12 in interest.

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How do you convert a decimal to a percent?

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To convert a decimal to a percent, multiply the decimal by 100 and add a percent sign. For example, 0.37 becomes 37%.

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What is the principal in the formula I = prt?

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The principal (p) is the initial amount of money that is deposited or borrowed before interest.

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What does 'r' represent in the formula I = prt?

Back

In the formula I = prt, 'r' represents the rate of interest, expressed as a decimal.

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If the principal is $800 and the interest rate is 3.5%, what is the interest earned after 6 months?

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The interest earned is $14.

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How do you find the time in years using the formula I = prt?

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To find time (t), rearrange the formula to t = I / (pr * 100).

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If you have a principal of $3,750 and earn $427.50 in interest at a rate of 3.8%, how long did you invest the money?

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You invested the money for 3 years.

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What is the interest rate if you borrowed $5,000 and paid $1,350 in interest over 3 years?

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The interest rate is 9%.