Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding.

Front

How do you convert a percent to a decimal?

Back

To convert a percent to a decimal, divide the percent by 100. For example, 3.25% = 3.25 ÷ 100 = 0.0325.

Front

What is the formula for calculating Simple Interest?

Back

The formula for Simple Interest is: Interest = Principal × Rate × Time.

Front

If you invest $500 at a 5% simple interest rate for 2 years, how much interest will you earn?

Back

Interest = $500 × 0.05 × 2 = $50.

Front

What does the 'R' in the interest formula stand for?

Back

The 'R' stands for Rate, which is the percentage of interest charged or earned.

Front

What does the 'T' in the interest formula stand for?

Back

The 'T' stands for Time, which is the duration for which the money is borrowed or invested.

Front

If Maria borrowed $3,000 at a simple interest rate of 4% per year, how much interest will she pay after 4 years?

Back

Interest = $3000 × 0.04 × 4 = $480.

Front

What is the total amount Maria has to repay after 4 years?

Back

Total Amount = Principal + Interest = $3000 + $480 = $3480.

Front

What does the 'P' in the interest formula stand for?

Back

The 'P' stands for Principal, which is the initial amount of money borrowed or invested.

Front

How do you find the total amount earned from an investment?

Back

Total Amount = Principal + Interest.