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: Interest = Principal × Rate × Time.

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, 4.3% becomes 0.043.

Front

What is the formula for calculating Simple Interest?

Back

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

Front

What does 'P' stand for in the Simple Interest formula?

Back

In the Simple Interest formula, 'P' stands for Principal, which is the initial amount of money invested or borrowed.

Front

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

Back

Interest = 500 × 0.04 × 3 = $60.

Front

What is the time period in the Simple Interest formula?

Back

The time period in the Simple Interest formula is the duration for which the money is invested or borrowed, usually expressed in years.

Front

True or False: Simple Interest can be calculated using months instead of years.

Back

FALSE. Simple Interest is typically calculated using years.

Front

How much interest will you earn on $1,000 at a 5% interest rate after 10 years?

Back

Interest = 1000 × 0.05 × 10 = $500.

Front

What does 'r' represent in the Simple Interest formula?

Back

In the Simple Interest formula, 'r' represents the rate of interest, expressed as a decimal.

Front

If Jane has $875 at a 4% interest rate for 7 years, how much interest does she earn?

Back

Interest = 875 × 0.04 × 7 = $245.