Understanding Simple Interest

The video tutorial explains how to calculate the original investment amount using the simple interest formula. It starts by introducing the problem of Juan's account earning $360 in interest over five years at a 0.1% monthly interest rate. The tutorial then explains the simple interest formula and records the given information. It converts the interest rate to a decimal and the time to months. Finally, it calculates the principal amount, concluding that Juan's original investment was $6000.

What is the total interest earned by Juan's account over five years?

• $500

• $1000

• $600

• $360

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 interest rate of 0.1% expressed as a decimal?

• 0.001

• 0.01

• 0.0001

• 0.1

How many months are equivalent to five years?

• 60

• 50

• 80

• 70

What is the importance of converting the interest rate to a decimal?

• To increase the interest

• To simplify the calculation

• To make the rate larger

• To decrease the interest

What is the next step after converting the interest rate and time?

• Determine the final balance

• Find the monthly interest

• Rearrange the formula to solve for the principal

• Calculate the total interest

What is the principal amount if the interest is $360, rate is 0.001, and time is 60 months?

• $6000

• $600

• $3600

• $1000

What is the final step in solving for the principal?

• Subtract interest from rate and time

• Multiply interest by rate and time

• Add interest to rate and time

• Divide interest by the product of rate and time

What was Juan's original investment?

• $6000

• $3600

• $5000

• $1000