Understanding Simple Interest Concepts

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 I = PRT, where I is the interest, P is the principal, R is the rate of interest, and T is the time in years.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is I = PRT.

Front

If you invest $1,000 at a rate of 5% for 2 years, what is the interest earned?

Back

The interest earned is $100.

Front

What does 'P' represent in the formula I = PRT?

Back

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

Front

What does 'R' represent in the formula I = PRT?

Back

'R' represents the Rate of interest, expressed as a decimal.

Front

What does 'T' represent in the formula I = PRT?

Back

'T' represents the Time in years for which the money is invested or borrowed.

Front

Calculate the maturity value of an investment of $1,500 at 4.25% for 3 years.

Back

The maturity value is $1,691.25.

Front

If you borrowed $10,000 and paid back $10,500, what is the interest?

Back

The interest is $500.

Front

How many days are in 3 weeks?

Back

There are 21 days in 3 weeks.

Front

What is the maturity value formula?

Back

The maturity value can be calculated as M = P + I, where M is the maturity value, P is the principal, and I is the interest.