Simple interest Flashcards
(24 cards)
What is the formula for calculating simple interest?
Simple Interest = Principal × Rate × Time
True or False: Simple interest is calculated on the initial principal only.
True
In the simple interest formula, what does ‘Principal’ refer to?
The initial amount of money invested or borrowed.
Fill in the blank: The ‘Rate’ in the simple interest formula is expressed as a _____ percentage.
annual
What does ‘Time’ represent in the simple interest formula?
The duration for which the money is invested or borrowed, usually in years.
If you invest $1,000 at a rate of 5% for 3 years, what is the simple interest?
$150
Multiple Choice: Which of the following factors does NOT affect simple interest? A) Principal B) Rate C) Compounding frequency D) Time
C) Compounding frequency
What happens to simple interest if the rate is doubled?
The simple interest will also double, assuming principal and time remain constant.
True or False: Simple interest can be calculated for any period of time, including days and months.
True
If the principal amount is $500 and the interest earned is $75 over 2 years, what is the rate?
7.5%
Fill in the blank: To find the total amount after interest is added, use the formula: Total Amount = Principal + _____
Simple Interest
Multiple Choice: Which of the following is a characteristic of simple interest? A) It grows exponentially B) It is calculated on the total accumulated amount C) It is calculated only on the principal D) It varies with compounding frequency
C) It is calculated only on the principal
What is the simple interest earned on a loan of $2,000 at a rate of 4% for 5 years?
$400
True or False: Simple interest is commonly used for short-term loans.
True
In the context of simple interest, what does the term ‘Principal’ mean?
The original sum of money borrowed or invested.
If you know the simple interest and the principal, how can you find the rate?
Rate = (Simple Interest / (Principal × Time)) × 100
Fill in the blank: The total interest earned over time can be calculated as _____ = Principal × Rate × Time.
Simple Interest
What is the simple interest on $10,000 at a rate of 6% for 4 years?
$2,400
Multiple Choice: Which of the following is true about simple interest? A) It increases with time B) It decreases with time C) It only applies to long-term investments D) It does not depend on the rate
A) It increases with time
If the simple interest earned is $300 on a principal of $1,500 over 5 years, what is the rate?
4%
True or False: Simple interest can be used for savings accounts.
True
What is the total amount to be repaid if $1,200 is borrowed at a simple interest rate of 8% for 3 years?
$1,392
Fill in the blank: When calculating simple interest, the time should be expressed in _____ years.
years
Multiple Choice: Which calculation method is used for simple interest? A) Compounding B) Linear C) Exponential D) Logarithmic
B) Linear
