Exploring the Simple Interest Formula

This video tutorial introduces the concept of simple interest, explaining its formula and applications in savings and loans. It provides two examples: calculating interest and balance for a savings account and determining the interest rate for a loan. The video emphasizes understanding how interest affects investments and loans.

What is the primary purpose of learning about simple interest?

• To calculate the total balance of an account without interest

• To understand how banks calculate compounded interest

• To develop an understanding of interest's impact on savings and loans

• To ignore the effects of inflation on savings

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

• Payment period

• Principal amount

• Percentage rate

• Profit earned

How is the interest rate 'R' expressed in the simple interest formula?

• As a decimal

• As a percentage

• As a whole number

• As a fraction

What is the correct way to express time in the simple interest formula?

• In days

• In years

• In weeks

• In months

Why is it important to express time in years for the simple interest formula?

• Because it's a banking standard

• To simplify calculations

• All of the above

• To match the interest rate period

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

• $420

• $350

• $140

• $1,050

After earning interest, what will be the new balance of the $3,500 investment?

• $4,000

• $3,920

• $3,850

• $3,500

If you borrow $6,000 and owe $7,200 after 18 months, what is the amount of interest?

• $600

• $1,500

• $1,000

• $1,200

How do you convert the interest rate from a decimal to a percentage?

• Subtract 100

• Multiply by 100

• Add 100

• Divide by 100

What was the simple interest rate for the loan shark example?

• 12%

• 13 1/3%

• 15%

• 10%