Simple interest

Front

What is simple interest?

Back

Simple interest is a method of calculating the interest charged or earned on a principal amount over a specific period of time, typically expressed as a percentage.

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 (as a decimal), and t is the time in years.

Front

If you deposit $500 at a 4% interest rate for 3 years, how much interest will you earn?

Back

$60

Front

What does P stand for in the simple interest formula?

Back

P stands for the principal amount, which is the initial sum of money deposited or borrowed.

Front

If Lisa earned $20 in interest after 1 year at a 5% interest rate, how much did she deposit?

Back

$400

Front

What does I stand for in the simple interest equation?

Back

I stands for Interest ($), which is the amount earned or paid for the use of money.

Front

If Amy deposits $200 for 5 years at a 5% interest rate, how much interest does she earn?

Back

$50

Front

What does r stand for in the simple interest equation?

Back

r stands for Rate (% as decimal), which is the percentage of interest charged or earned.

Front

Howard borrowed $4,000 at an 8% interest rate for 2 years. How much interest will he pay?

Back

$640

Front

How do you convert a percentage to a decimal for the simple interest formula?

Back

To convert a percentage to a decimal, divide the percentage by 100.