Simple Interest

Simple Interest

Vocabulary

A savings account is a basic type of bank account that allows you to deposit money and keep it safe, and withdraw funds, all while earning interest.

Simple interest is interest calculated on the principal portion of a loan or the original contribution to a savings account.

Principal is the amount that you borrow from a lender or the amount you invest.

The interest is extra money that goes to your lender in exchange for giving you a loan.

Multiple Choice

The simple interest formula is I=Prt. What does the t represent?

• Principle

• Interest

• Time, in hours

• Time, in years

Multiple Choice

What does the "I" in the interest formula stand for?

• Principal

• Interest

• Rate

• Time

Multiple Choice

What does the "r" in the interest formula stand for?

• Principal

• Interest

• rate

• time

Multiple Choice

What does the "p" in the interest formula stand for?

• Principal

• Interest

• rate

• time

Multiple Choice

Write the percent as a decimal.

4.3%

• 4.3

• .43

• .043

• 4300

Multiple Choice

The rate is given as a percent (%). Before using it in the simple interest formula, you must first convert it to a______.

• fraction

• decimal

• ratio

• dollar amount

Multiple Choice

True of False: Before you can calculate INTEREST your time must be in MONTHS!

• FALSE

• TRUE

Multiple Choice

Ann puts $300 in a bank account earning 4% interest. How much will she earn in interest in 1 year?

• 4

• 8

• 12

• 16

Multiple Choice

Rachel invested $2,700 in a savings account earning 7% simple interest. If she invests for 2 years, how much money will she have in total?

• $3,078

• $378

• $40,500

• $4536

Multiple Choice

Dan borrowed $2,000 for 6 months at 12% annual simple interest rate. How much interest is that? Remember your time has to be in YEARS!! 6 months is half of a year or .5

• $120

• $144

• $1,200

• $1,440

Multiple Choice

How much simple interest would be earned on a savings account of $4,500 at 5.5% interest per year after 24 months?

• $594,000

• $495

• $49,500

• $5,940

Multiple Choice

How much simple interest would be earned on a savings account of $8,000 at 4% interest per year after 36 months?

• $960

• $115,200

• $9,600

• $1,152,000

Multiple Choice

You invest $3,000 in a bank account paying 6.5% simple interest annually. How much interest will you receive after 30 months?

• $48,750

• $585,000

• $5,850

• $487.50

Multiple Choice

Caiden earned $475 from mowing lawns last summer. He deposited this money in an account that pays an interest rate of 3.8% in simple interest. What will be his balance after 15 years?

• $270.75

• $745.75

• $2,707.50

• $846.80

Multiple Choice

Beyonce went to the mall and saw a massage chair that she would have to take a loan out for $6500 to purchase. The bank said that she could get a simple interest rate of 8% for 5 years. What is the total amount that Beyonce will pay for the chair?

• $2600

• $910

• $9100

• $260

Done!