Simple Interest

Principal = $500

Interest Rate = 5%

Time = 5 years

What is the interest earned?

• $95

• $125

• $105

• $135

Answer explanation

To calculate the interest earned, we use the formula: Interest = Principal x Interest Rate x Time. In this case, Principal = $500, Interest Rate = 5% (0.05), and Time = 5 years. So, Interest = $500 x 0.05 x 5 = $125. Therefore, the correct choice is $125.

The simple interest formula is I=PRT.  What does the T represent?

• Principal

• Time, in hours

• Interest

• Time, in years

Answer explanation

The formula I=PRT is used to calculate simple interest, where 'I' stands for Interest, 'P' for Principal, 'R' for Rate and 'T' for Time. In this context, 'T' represents the time period for which the money is borrowed or invested, and it is typically measured in years, not hours. Therefore, the correct answer is 'Time, in years'.

Write 0.37 as a percent (%)

• 37%

• .37%

• 3.7%

Answer explanation

The question asks to convert 0.37 into a percentage. To convert a decimal into a percentage, we multiply by 100. So, 0.37 multiplied by 100 equals 37. Therefore, the correct answer is 37%.

Write 4.3% as a decimal.

• 4.3

• .43

• 0.043

• 4300

Answer explanation

To convert 4.3% to a decimal, divide by 100. This is because percentages are based on a scale of 100. So, 4.3% is equal to 4.3/100, which simplifies to 0.043. Therefore, the correct answer is 0.043.

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

• Principal

• Rate

• Time

• Interest

Answer explanation

The 'I' in the interest formula stands for 'Interest'. The interest formula is generally expressed as I = PRT, where 'P' stands for principal, 'R' for rate, and 'T' for time. Therefore, the correct answer to the question is 'Interest'.

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

• Rate

• Principal

• Interest

• Time

Answer explanation

The 'R' in the interest formula stands for 'Rate'. This is because in the formula for calculating interest, 'R' is used to denote the rate of interest. The other options, 'Principal', 'Interest', and 'Time', are represented by different letters in the formula.

Dan borrows $1200 from a bank with 8% simple interest per year.  How much will he have to pay back IN TOTAL after 2 years?

• $150

• $1350

• $192

• $1392

Answer explanation

The question asks for the total amount Dan will have to pay back after borrowing $1200 with an 8% simple interest per year for 2 years. Simple interest is calculated as (Principal amount * Rate * Time). So, (1200 * 8/100 * 2) = $192. This is the interest. The total amount to pay back is the principal amount plus the interest, which is (1200 + 192) = $1392.

How much interest will be earned for principal of $2,000 at and 8% rate for 5 years.

• $160

• $80,000

• $800

• $16

Answer explanation

To calculate the interest earned, use the formula: Interest = Principal x Rate x Time. In this case, the principal is $2,000, the rate is 8% (0.08), and the time is 5 years. So, Interest = 2000 x 0.08 x 5 = $800. Therefore, the correct choice is $800.

When Lisa was born, her parents put $8,000 into a college fund account that earned 9% simple interest. Find the amount of interest earned after 18 years.

• $720

• $1,080

• $20,960

• $12,960

Answer explanation

To find the amount of interest earned, we use the simple interest formula: Interest = Principal x Rate x Time. In this case, the principal is $8,000, the rate is 9% (0.09), and the time is 18 years. So, Interest = 8000 x 0.09 x 18 = $12,960. Therefore, the correct choice is $12,960.

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

Answer explanation

The question asks about the conversion of a rate given as a percent before using it in the simple interest formula. The correct answer is 'Decimal'. This is because percentages are fractions of 100, and to use them in calculations, they need to be converted to their decimal equivalents. For example, 50% becomes 0.5 in decimal form.