Calculating Simple Interest: Key Concepts and Examples

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

• Principal amount

• Payment total

• Period of time

• Percentage rate

How do you convert a percentage rate to a decimal for the formula?

• Multiply by 100

• Divide by 100

• Move the decimal two places to the left

• Move the decimal two places to the right

What does the 'T' in the simple interest formula stand for?

• Transaction fee

• Total amount

• Tax rate

• Time in years

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

• Risk factor

• Repayment amount

• Rate of interest

• Return on investment

What was the interest earned on Caitlyn's investment?

• $28,125

• $480

• $3,125

• $67.5

How much interest did you earn on an $8,000 investment at 6% for one year?

• $28,125

• $3,125

• $67.5

• $480

What is the total amount Sarah will pay on her loan?

• $67.5

• $28,125

• $3,125

• $15,000

How do you adjust the time component for a period less than one year?

• Add 12 to the months

• Multiply the months by 12

• Divide the months by 12

• Subtract the months from 12

If you invest $1,500 at a rate of 6%, how much interest is earned after 9 months?

• $3,125

• $28,125

• $480

• $67.5

What is the correct formula for calculating simple interest?

• I = P / RT

• I = PRT

• I = P + R + T

• I = P * R / T