Simple Interest

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

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 the Principal amount, R is the Rate of interest (in decimal), and T is the Time (in years).

Front

How do you convert months into years for Simple Interest calculations?

Back

To convert months into years, divide the number of months by 12. For example, 15 months = 15/12 = 1.25 years.

Front

If the Principal is $1,500, Rate is 19%, and Time is 1.25 years, what is the Simple Interest?

Back

Simple Interest = 1500 × 0.19 × 1.25 = $356.25.

Front

What is the Principal in a Simple Interest problem?

Back

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

Front

What does the Rate represent in Simple Interest calculations?

Back

The Rate represents the percentage of interest charged or earned on the Principal amount, usually expressed as an annual rate.

Front

How do you calculate the interest earned on a bank deposit using Simple Interest?

Back

Use the formula: SI = P × R × T, where P is the amount deposited, R is the interest rate, and T is the time the money is held in the bank.

Front

If you have $500 at a 10% interest rate for 8 months, how much interest do you earn?

Back

Convert 8 months to years: 8/12 = 0.67 years. Then, SI = 500 × 0.10 × 0.67 = $33.50.

Front

What is the total amount after earning Simple Interest?

Back

Total Amount = Principal + Simple Interest.

Front

If a loan of $4,750 has a 19.5% interest rate for 2.5 years, what is the Simple Interest?

Back

SI = 4750 × 0.195 × 2.5 = $2315.63.