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: Interest = Principal × Rate × Time.

Front

What is the formula for calculating Simple Interest?

Back

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

Front

If you borrow $1,000 at a 5% interest rate for 3 years, how much interest will you pay?

Back

Interest = 1000 × 0.05 × 3 = $150.

Front

What is the principal amount in a loan?

Back

The principal amount is the original sum of money borrowed or invested, before 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, 5% becomes 0.05.

Front

If you want to earn $200 in interest at a rate of 4% per year, how long will you need to invest your money?

Back

Using the formula: Time = Interest / (Principal × Rate). If Principal is unknown, you cannot calculate time without it.

Front

What is the total amount after earning simple interest?

Back

Total Amount = Principal + Interest.

Front

If you invest $500 at a 6% interest rate for 2 years, what will be the total amount?

Back

Interest = 500 × 0.06 × 2 = $60. Total Amount = 500 + 60 = $560.

Front

What is the rate of interest in a loan?

Back

The rate of interest is the percentage of the principal charged as interest for a specific period.

Front

How much interest will you earn on $2,000 at a 3% interest rate over 4 years?

Back

Interest = 2000 × 0.03 × 4 = $240.