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?

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The formula for calculating 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

How do you convert a decimal to a percent?

Back

To convert a decimal to a percent, multiply the decimal by 100 and add a percent sign. For example, 0.37 becomes 37%.

Front

If Olivia spends $7400 on furniture with a 9.5% simple interest rate, how much will she pay in total after 8 years?

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Total Amount = Principal + Interest = $7400 + ($7400 × 0.095 × 8) = $13,024.

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How do you convert time in months to years for Simple Interest calculations?

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To convert time in months to years, divide the number of months by 12.

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What is the Principal in Simple Interest?

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

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What does the Rate represent in Simple Interest?

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The Rate represents the percentage of the principal charged as interest per time period, usually expressed as an annual rate.

Front

How much interest will Mark pay on a loan of $25,690 at a 5.2% interest rate after 5 years?

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Interest = Principal × Rate × Time = $25,690 × 0.052 × 5 = $6,679.40.

Front

What are the units for Principal and Interest in Simple Interest?

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The units for Principal and Interest are always in money (e.g., dollars, euros).

Front

What is the total amount paid if the Principal is $5000, the Rate is 4%, and the Time is 3 years?

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Total Amount = Principal + Interest = $5000 + ($5000 × 0.04 × 3) = $6200.