Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding. It is calculated using the formula I = P * r * t, where I is the interest, P is the principal, r is the rate of interest, and t is the time in years.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is I = P * r * t.

Front

In the formula I = P * r * t, what does 'P' represent?

Back

'P' represents the Principal amount, which is the initial sum of money borrowed or invested.

Front

In the formula I = P * r * t, what does 'r' represent?

Back

'r' represents the Rate of interest, expressed as a decimal.

Front

In the formula I = P * r * t, what does 't' represent?

Back

't' represents the Time period in years for which the money is borrowed or invested.

Front

If Emilio borrows $1200 at 8% simple interest for 2 years, how much interest will he pay?

Back

The interest paid will be I = 1200 * 0.08 * 2 = $192.

Front

What will be the total amount Emilio has to pay back after 2 years?

Back

Total amount = Principal + Interest = $1200 + $192 = $1392.

Front

Samantha invested $500 into two accounts. If Bank A offers 5% for 10 years, how much interest does she earn from Bank A?

Back

Interest from Bank A = 500 * 0.05 * 10 = $250.

Front

Samantha also invests in Bank B at 3% for 10 years. How much interest does she earn from Bank B?

Back

Interest from Bank B = 500 * 0.03 * 10 = $150.

Front

What is the total balance of Samantha's two accounts after 10 years?

Back

Total balance = Principal + Interest from Bank A + Interest from Bank B = $500 + $250 + $150 = $900.