Simple Interest Formula

Pedro plans to borrow $1,200 from the bank to buy a car, with a plan to repay it in three years. The bank charges 10% simple interest. The video explains how to calculate the interest using the formula I = p * r * t, where I is the interest, p is the principal, r is the interest rate, and t is the time in years. By applying the formula, Pedro's interest is calculated to be $360. Therefore, the total amount Pedro will owe the bank is $1,560, which includes the principal and the interest. The lesson concludes with a recap of how to use the simple interest formula.

What is the principal amount Pedro plans to borrow from the bank?

• $1,500

• $1,200

• $1,000

• $2,000

Which formula is used to calculate simple interest?

• I = p - r - t

• I = p + r + t

• I = p * r * t

• I = p / r / t

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

• Divide by 10

• Multiply by 100

• Multiply by 10

• Divide by 100

What is the interest rate Pedro is charged by the bank?

• 5%

• 10%

• 15%

• 20%

What is the total amount Pedro will owe the bank after three years?

• $1,200

• $1,360

• $1,560

• $1,720