Calculating Simple Interest

Front

What is the formula for calculating simple interest?

Back

I = P * r * t, where I is the interest, P is the principal, r is the rate, and t is the time.

Front

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

Back

P represents the principal, which is the amount of money borrowed or deposited.

Front

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

Back

r stands for the rate of interest, expressed as a decimal.

Front

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

Back

t represents the time the money is borrowed or invested, typically in years.

Front

How do you convert months into years for calculating simple interest?

Back

To convert months into years, divide the number of months by 12.

Front

If you have a principal of $1000, a rate of 5%, and a time of 3 years, what is the simple interest?

Back

The simple interest is I = 1000 * 0.05 * 3 = $150.

Front

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

Back

The interest is I = 1200 * 0.08 * 2 = $192.

Front

What is the total amount Emilio will pay back after 2 years?

Back

The total amount is the principal plus interest: $1200 + $192 = $1392.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus any interest that has already been added.

Front

If the interest rate is 10% per year, how much interest will $500 earn in 1 year?

Back

The interest earned will be I = 500 * 0.10 * 1 = $50.