Simple Interest and Time Calculations

The video tutorial explains how to calculate the interest earned on an investment using the simple interest formula. Rachel invests $500 at a 2% monthly interest rate for two years. The tutorial covers converting the interest rate to a decimal, converting years to months, and applying the formula I = P * R * T to find the total interest earned, which is $240.

What is the principal amount Rachel invested?

• Five hundred dollars

• One thousand dollars

• Two hundred dollars

• Seven hundred dollars

Which formula is used to calculate simple interest?

• I = P + R + T

• I = P * R * T

• I = P - R - T

• I = P / R / T

How is the rate of 2% expressed as a decimal?

• 0.2

• 0.02

• 0.002

• 2.0

How many months are there in two years?

• 12 months

• 18 months

• 24 months

• 30 months

What is the time period used in the interest calculation?

• 12 months

• 36 months

• 48 months

• 24 months

What is the total interest earned by Rachel over two years?

• 480 dollars

• 120 dollars

• 360 dollars

• 240 dollars

What is the monthly interest rate used in the calculation?

• 0.03

• 0.02

• 0.04

• 0.01