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: Simple Interest = Principal × Rate × Time.

Front

What is the formula for calculating Simple Interest?

Back

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

Front

If you invest $1,000 at a rate of 5% for 3 years, what is the Simple Interest earned?

Back

Simple Interest = $1,000 × 0.05 × 3 = $150.

Front

What is the principal in a Simple Interest calculation?

Back

The principal is the initial amount of money that is invested or loaned.

Front

How does the rate affect Simple Interest?

Back

The rate is the percentage of the principal that is paid as interest over a specific time period. A higher rate results in more interest earned.

Front

If the principal is $2,000 and the rate is 8% for 5 years, what is the Simple Interest?

Back

Simple Interest = $2,000 × 0.08 × 5 = $800.

Front

What is the time period in Simple Interest calculations?

Back

The time period is the duration for which the money is invested or borrowed, usually expressed in years.

Front

If you have a loan of $1,500 at a rate of 19% for 15 months, what is the Simple Interest?

Back

Simple Interest = $1,500 × 0.19 × (15/12) = $356.25.

Front

What is the effect of time on Simple Interest?

Back

The longer the time period, the more interest will be earned or paid, as it is directly proportional to time.

Front

If you deposit $225 at a rate of 1.5% for 2 years, what is the Simple Interest?

Back

Simple Interest = $225 × 0.015 × 2 = $6.75.