Simple Interest

Front

What is simple interest?

Back

Simple interest is a method of calculating the interest charge on a loan or financial product based on the original principal amount and a fixed interest rate over a specified period of time.

Front

How is simple interest calculated?

Back

Simple interest is calculated using the formula: I = P * r * t, where I is the interest, P is the principal amount, r is the annual interest rate (in decimal), and t is the time in years.

Front

If Ethan borrowed $2,190 at a simple interest rate of 2.5% for 3 years, how much interest will he pay?

Back

Ethan will pay $164.25 in interest.

Front

What is the total amount Mark will pay back if he took a loan of $15,000 at 5% simple interest for 6 years?

Back

Mark will pay a total of $17,500.

Front

What is the total amount Veronica will pay for a loan of $5,500 at 3.25% simple interest for 48 months?

Back

Veronica will pay a total of $6,215.00.

Front

Which loan option is better for Miles: a 3-year loan at 10% simple interest or a 5-year loan at 6.5% simple interest?

Back

Option A (3-year loan at 10%) is better, and he will save $28.75.

Front

How do you determine the better loan option when comparing two loans with different interest rates and terms?

Back

To determine the better loan option, calculate the total amount paid for each loan using the simple interest formula and compare the totals.

Front

What is the difference in interest earned between City Bank's 4.75% and First National's 3.9% simple interest rates on a $500 account after 12 years?

Back

Tom will earn $51 more in interest at City Bank compared to First National.

Front

What is the principal amount in a simple interest calculation?

Back

The principal amount is the initial sum of money borrowed or invested, before any interest is added.

Front

What does the term 'interest rate' refer to in the context of simple interest?

Back

The interest rate is the percentage at which interest is calculated on the principal amount, typically expressed as an annual rate.