Simple Interest Practice

If you invest $500 at a 5% simple interest rate for 3 years, how much interest will you earn?

• $50

• $75

• $100

• $150

Calculate the total value of an investment of $1000 at a 4% simple interest rate for 5 years.

• $1000

• $1200

• $1400

• $1600

What is the impact of a higher interest rate on simple interest?

• A higher interest rate decreases the amount of interest earned on an investment.

• A higher interest rate has no effect on the amount of interest earned.

• A higher interest rate increases the amount of interest earned on an investment or paid on a loan.

• A higher interest rate only affects loans, not investments.

How does the time period affect the amount of simple interest earned?

• The longer the time period, the more interest will be earned, as interest is calculated for each year the money is invested or borrowed.

• The time period has no effect on the amount of simple interest earned.

• Interest is only calculated once, regardless of the time period.

• A shorter time period results in more interest earned.

How can you express the interest rate as a decimal?

• Multiply the percentage by 100.

• Divide the percentage by 100.

• Add 100 to the percentage.

• Subtract 100 from the percentage.

What does the principal amount refer to in the context of simple interest?

• The total amount of money after interest is applied.

• The initial sum of money invested or loaned, before any interest is applied.

• The amount of interest earned on an investment.

• The final amount to be repaid including interest.

If a loan of $2000 has a simple interest rate of 6% for 2 years, what is the total interest paid?

• $240

• $120

• $180

• $300

How is simple interest calculated?

• Simple interest is calculated using the formula: I = P * r * t, where I is the interest, P is the principal amount, r is the annual interest rate (in decimal), and t is the time in years.

• Simple interest is calculated by multiplying the principal amount by the square of the interest rate and the time period.

• Simple interest is calculated by adding the principal amount to the interest earned over the time period.

• Simple interest is calculated using the formula: I = P + r + t, where I is the total amount after interest.

What is simple interest?

• A method of calculating interest based on the original principal amount, interest rate, and time period.

• A type of interest that is compounded annually.

• An interest calculation that only applies to savings accounts.

• A method of calculating interest that varies with the market rate.

What is the formula to find the total value of an investment after earning simple interest?

• Total value = Principal + Interest, where Interest = P * r * t.

• Total value = Principal - Interest, where Interest = P * r * t.

• Total value = Principal * (1 + r * t)

• Total value = Principal + (P * r * t)