Exploring Simple Interest in Financial Literacy

Mr. Richards introduces the concept of simple interest, explaining it as money paid or earned for the use of money. He defines principal and demonstrates the simple interest formula: I = PRT, where I is interest, P is principal, R is rate, and T is time in years. Through five examples, he illustrates how to calculate interest for savings accounts, loans, and credit card charges, emphasizing the importance of converting percentages to decimals and months to years. The video concludes with solving for the interest rate in a student loan scenario.

What does the principle in simple interest refer to?

• The time period in years

• The rate of interest as a decimal

• The initial amount of money deposited or borrowed

• The amount of interest earned or paid

How is the interest rate expressed in the simple interest formula?

• As an integer

• As a decimal

• As a fraction

• As a percentage

What is the total interest earned by Jenny in 3 years on her savings account?

• $156

• $117

• $130

• $125

How long was José's money saved to earn his interest?

• 12 months

• 9 months

• 1 year

• 3/4 of a year

What is the correct way to convert months into years for the simple interest formula?

• Multiply by 30

• Divide by 365

• Multiply by 12

• Divide by 12

How much interest does Mrs. Hanover pay on her loan?

• $55.55

• $60.00

• $50.00

• $51.33

What was the interest rate on the office manager's credit card?

• 9.9%

• 9.5%

• 10%

• 8.5%

How much total money does the office manager owe after one month?

• $428.51

• $425.00

• $430.00

• $428.50

What was Maggie's interest rate on her student loan?

• 6%

• 5.5%

• 5%

• 4.5%

How much interest did Maggie pay over three years?

• $400

• $350

• $300

• $390