Exploring the Simple Interest Formula

What does the 'P' in the simple interest formula represent?

• Percentage of interest

• Principal amount

• Payment period

• Profit earned

If $2,000 is invested at a 5% simple interest rate for 4 years, how much interest is earned?

• $200

• $400

• $600

• $800

How can the rate of interest be calculated using the simple interest formula?

• Interest divided by principal plus time

• Interest plus principal divided by time

• Interest divided by principal times time

• Principal divided by interest times time

What does the 'T' in the simple interest formula stand for?

• Term of investment

• Total interest

• Time in years

• Transaction amount

What is the total amount of interest paid on a $5,000 loan over 5 years at an 8% simple interest rate?

• $2,000

• $4,000

• $1,000

• $3,000

What is the value of an investment after 5 years if $1,000 is invested at a 5% simple interest rate?

• $1,750

• $1,500

• $1,250

• $2,000

What is the principal amount if $600 interest is earned over 3 years at a 4% rate?

• $5,000

• $4,000

• $5,500

• $4,500

For how many years was a loan taken out if it accrued $1,200 in interest on a principal of $4,000 at a rate of 6%?

• 8 years

• 7 years

• 6 years

• 5 years

If a loan of $10,000 is repaid with $12,000 after 5 years, what was the simple interest rate?

• 20%

• 4%

• 40%

• 2%

How can the time period of an investment be found using the simple interest formula?

• Principal times rate divided by interest

• Interest divided by rate minus principal

• Interest divided by principal plus rate

• Interest divided by principal times rate