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What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding. It is given by the formula: I = P * r * t, where I is the interest, P is the principal, r is the rate of interest, and t is the time in years.

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

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

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

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r represents the rate of interest, usually expressed as a percentage.

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What does the 't' in the interest formula indicate?

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t indicates the time period for which the money is invested or borrowed, typically measured in years.

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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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How do you convert a percent to a decimal?

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To convert a percent to a decimal, divide the percent by 100. For example, 4.3% becomes 0.043.

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If the principal is $500, the interest rate is 5%, and the time is 5 years, what is the interest earned?

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The interest earned is $125, calculated using the formula I = P * r * t.

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What is the formula for calculating Simple Interest?

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

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If you have an interest of $200, a principal of $1000, and a time of 4 years, what is the interest rate?

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The interest rate is 5%, calculated using the formula r = I / (P * t).

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What is the relationship between principal, interest, and total amount?

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The total amount (A) is the sum of the principal (P) and the interest (I). A = P + I.