Mastering the Simple Interest Formula

The video tutorial explains the simple interest formula, I = P * R * T, where I is the interest, P is the principal, R is the interest rate as a decimal, and T is the time in years. It provides three examples: calculating interest for a savings account, determining the time for a loan, and finding the principal amount borrowed. The tutorial emphasizes that knowing any three components of the formula allows you to find the fourth.

What does the 'P' in the simple interest formula represent?

• Percentage rate

• Period in years

• Payment received

• Principal amount

To convert a percentage rate to a decimal for the formula, what should you do?

• Subtract 0.01

• Divide by 100

• Add 0.01

• Multiply by 100

What does the 'R' in the simple interest formula stand for?

• Rate of interest

• Ratio

• Return on investment

• Revenue

If $1,500 is invested at a 4.1% interest rate for 2 years, how much interest is earned?

• $246

• $123

• $150

• $61.50

What is the total amount after 2 years on an initial investment of $1,500 with $123 interest?

• $1,500

• $1,623

• $1,246

• $1,723

How long was a loan for if $892.50 in interest was paid on a principal of $2,550 at a 7% rate?

• 7 years

• 5 years

• 10 years

• 3 years

What is the simplified product of the principal and the rate in the loan example?

• $189.50

• $255.00

• $200.00

• $178.50

If Bureaux paid $1,099.20 in interest at a 6.4% rate over 3 years, how much did she initially borrow?

• $5,500

• $6,000

• $5,725

• $5,000

What operation is performed to isolate 'P' in the formula when 'I', 'R', and 'T' are known?

• Division

• Addition

• Subtraction

• Multiplication

What is the correct decimal conversion for a 6.4% interest rate?

• 0.0064

• 6.4

• 0.64

• 0.064