Simple Interest #2 (2023)

Front

What is Simple Interest?

Back

Simple Interest is the interest calculated on the principal amount only, without compounding. It can be calculated using the formula: Simple Interest = Principal × Rate × Time.

Front

How do you convert time in months to years for calculating Simple Interest?

Back

To convert time in months to years, divide the number of months by 12.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: SI = P × R × T, where SI is Simple Interest, P is Principal, R is Rate (as a decimal), and T is Time (in years).

Front

If Anna invested $2,500 at an annual rate of 5%, how long will it take to earn $1,125 in interest?

Back

It will take Anna 9 years to earn $1,125 in interest.

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 $1200 at 8% simple interest for 2 years?

Back

Emilio will have to pay back a total of $1392.

Front

What is the interest earned on an inheritance of $50,000 at 2% interest until the age of 21?

Back

Allison will earn $9,000 in interest by her 21st birthday.

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What does 'Principal' mean in the context of Simple Interest?

Back

Principal is the initial amount of money that is invested or borrowed before interest is applied.

Front

What does 'Rate' refer to in Simple Interest calculations?

Back

Rate refers to the percentage of interest charged or earned on the principal amount, expressed as a decimal.

Front

How do you calculate the total amount after interest is applied?

Back

Total Amount = Principal + Simple Interest.