Simple Interest

Stefan borrowed $8,950 at a 6.85% interest rate for 6 years. How much total will he pay back?

• $11,500.00

• $12,628.45

• $13,000.00

• $10,800.00

What happens to the total amount paid if the time period is doubled?

• The total amount paid will remain the same.

• The total interest paid will also double, assuming the interest rate remains constant.

• The total amount paid will decrease by half.

• The total amount paid will triple.

If Abby earned $600 and wants to double her money at a 5% interest rate, how long will it take?

• 10 years

• 15 years

• 20 years

• 25 years

Ethan borrowed $2,190 at a 2.5% interest rate for 3 years. How much interest will he pay?

• $164.25

• $150.00

• $200.00

• $180.75

What is the formula for calculating Simple Interest?

• I = P + r + t

• I = P * r * t

• I = P / (r * t)

• I = P - (r * t)

Why is it important to understand Simple Interest?

• It helps in making informed financial decisions regarding loans, savings, and investments.

• It is only relevant for understanding complex financial instruments.

• It has no real-world application in personal finance.

• It is primarily used for calculating compound interest.

What does the interest rate represent in Simple Interest?

• The total amount of money borrowed or invested.

• The percentage of the principal that is charged as interest over a specific period of time.

• The duration for which the money is borrowed or invested.

• The fees associated with processing a loan application.

What is the difference between Simple Interest and Compound Interest?

• Simple Interest is calculated on the principal amount only, while Compound Interest is calculated on the principal plus any interest that has already been added.

• Simple Interest is calculated on the total amount including interest, while Compound Interest is calculated only on the principal amount.

• Simple Interest is always higher than Compound Interest over time.

• Simple Interest is calculated annually, while Compound Interest is calculated monthly.

How does increasing the interest rate affect the total interest paid?

• Increasing the interest rate will decrease the total interest paid on the principal amount.

• Increasing the interest rate will have no effect on the total interest paid.

• Increasing the interest rate will increase the total interest paid on the principal amount.

• Increasing the interest rate will only affect future loans, not existing ones.

What is the time period in Simple Interest calculations?

• The time period is the duration for which the money is borrowed or invested, usually measured in years.

• The time period is the total amount of interest paid over the life of the loan.

• The time period is the rate at which interest is calculated annually.

• The time period is the initial amount of money invested or borrowed.