Calculating Simple Interest: Key Concepts and Applications

What is the primary reason students should learn about simple interest?

• To understand how banks work

• To prepare for future loans such as for cars or houses

• To improve their multiplication skills

• To learn about savings accounts

What is the principal amount in the context of simple interest?

• The rate of interest per year

• The total amount after adding interest

• The interest earned over time

• The initial amount of money before interest

How do you convert a percentage to a decimal for calculation purposes?

• Add 0.01

• Multiply by 100

• Divide by 100

• Subtract 0.01

What was the interest earned by Jessica in one year?

• $2

• $5

• $1

• $10

What is the correct formula for calculating simple interest?

• Principal + Rate + Time

• Principal - Rate - Time

• Principal / Rate / Time

• Principal x Rate x Time

What does the 'time' variable in the simple interest formula represent?

• The time in months

• The time in days

• The time in years

• The time in hours

What is the total amount after adding interest to the principal?

• Principal + Interest

• Interest + Rate

• Principal + Rate

• Principal x Interest

Why is it important to use parentheses when calculating simple interest on a calculator?

• To add interest to the principal

• To convert percentages to decimals

• To make the calculation faster

• To ensure correct order of operations

After two years, how much total will Austin have in his savings account?

• $100

• $96

• $90

• $86

How much interest will be earned on a $40,000 principal at a 6% rate in one year?

• $2,400

• $240

• $24,000

• $240,000