Mastering the Simple Interest Formula

This video tutorial covers the concept of simple interest, explaining the formula I = P * R * T, where I is interest, P is principal, R is rate, and T is time. It introduces key vocabulary such as interest, principal, rate, and time, and provides four examples to illustrate how to calculate interest in different scenarios, including savings accounts, car loans, and short-term loans. The tutorial also demonstrates how to find the interest rate when given the total interest paid over a period.

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

• Payment period

• Profit earned

• Percentage rate

• Principal amount

How is interest calculated in the simple interest formula?

• I = P - R - T

• I = P * R * T

• I = P / (R * T)

• I = P + R + T

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

• Return on investment

• Rate of interest

• Repayment amount

• Revenue generated

What does the 'T' in the simple interest formula represent?

• Time in years

• Tax rate

• Total amount

• Transaction fee

If $6,000 is deposited at a 3% interest rate for 8 years, how much interest is earned?

• $720

• $240

• $480

• $1,440

After 8 years, what is the total amount in the savings account if $6,000 was initially deposited and $1,440 interest was earned?

• $7,440

• $6,000

• $1,440

• $5,560

For a $25,000 car loan at 7.5% interest over 6 years, how much interest is paid?

• $18,750

• $11,250

• $2,500

• $1,875

What is the total repayment amount for a $25,000 car loan at 7.5% interest over 6 years?

• $25,000

• $31,250

• $36,250

• $11,250

For a 6-month loan of $1,500 at an 8% annual interest rate, how much interest is paid?

• $60

• $120

• $30

• $90

If the total interest paid on a $17,000 car loan over 8 years is $12,240, what was the annual interest rate?

• 7%

• 9%

• 5%

• 11%