Simple Interest Practice

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

How do you calculate Simple Interest?

Back

Simple Interest can be calculated using the formula: 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 invest $500 at a 5% simple interest rate for 3 years, how much interest will you earn?

Back

Interest = 500 × 0.05 × 3 = $75.

Front

What is the formula to convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 4.3% = 4.3 / 100 = 0.043.

Front

What is the Principal in Simple Interest?

Back

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

Front

What does the Rate represent in Simple Interest?

Back

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

Front

If a loan of $1,000 is taken at a 7% interest rate for 2 years, what is the total interest paid?

Back

Interest = 1000 × 0.07 × 2 = $140.

Front

What is the relationship between Principal, Interest, and Total Amount?

Back

Total Amount = Principal + Interest.

Front

How do you express 6% as a decimal?

Back

6% as a decimal is 0.06.

Front

What is the time period in the Simple Interest formula?

Back

The time period is the duration for which the money is borrowed or invested, usually measured in years.