Simple Interest #2 (2023)

Front

What is Simple Interest?

Back

Simple Interest is a method of calculating the interest charge on a loan or financial investment. It is calculated using the formula: Interest = Principal × Rate × Time.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: I = P × r × t, where I is the interest, P is the principal amount, r is the rate of interest per year, and t is the time in years.

Front

If Anna invests $2,500 at an annual rate of 5%, how much interest will she earn in 9 years?

Back

$1,125.

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 7.25% becomes 0.0725.

Front

What is the total amount to be paid back if Emilio borrows $1,200 at 8% interest for 2 years?

Back

$1,392.

Front

How do you find the time in years if given time in months?

Back

Divide the number of months by 12.

Front

What is the principal amount in a simple interest calculation?

Back

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

Front

What does the rate in a simple interest formula represent?

Back

The rate represents the percentage of interest charged or earned per year.

Front

If you want to calculate the interest earned on $50,000 at 2% for 9 years, what is the interest?

Back

$9,000.

Front

What is the difference between simple interest and compound interest?

Back

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