Simple Interest Practice

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 (as a decimal), and t is the time in years.

Front

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

Back

The 'P' represents the principal, which is the initial amount of money invested or borrowed.

Front

If the principal is $500, the interest rate is 5%, and the time is 5 years, how much interest is earned?

Back

$125

Front

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

Back

The 'r' represents the interest rate, expressed as a decimal.

Front

How do you convert a percentage to a decimal?

Back

Divide the percentage by 100. For example, 5% becomes 0.05.

Front

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

Back

The 't' represents the time the money is invested or borrowed, measured in years.

Front

If you have a principal of $2,000, an interest rate of 8%, and a time of 5 years, how much interest will you earn?

Back

$800

Front

What is the first step in calculating simple interest?

Back

Identify the principal, interest rate, and time.

Front

What is the importance of converting the interest rate to a decimal before using it in the formula?

Back

It allows for accurate calculations in the simple interest formula.

Front

If the interest earned is $125, what was the principal if the rate is 5% and the time is 5 years?

Back

$500