Simple Interest
Simple interest is a fundamental finance concept involving the interest on a principal sum over time. It's calculated using the formula SI = PRT, where 'SI' is the simple interest, 'P' is the principal, 'R' is the annual interest rate, and 'T' is the time in years. This method is typically used for short-term loans or investments. Understanding the difference between simple and compound interest is crucial for financial decision-making, as it affects the total interest accrued.
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1
In finance, the ______ is the amount earned or paid on the original sum for a specific ______, typically measured in years.
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2
Simple Interest Formula
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3
Total Amount Calculation
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4
Principal Calculation
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5
When determining the total amount after interest, add the ______ interest to the ______ and ensure time is expressed as a fraction if less than a year.
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6
Simple Interest Calculation
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7
Total Amount with Simple Interest
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8
The ______ effect of compound interest results in interest being earned on a growing balance, which leads to a ______ total interest over the same time frame than with simple interest.
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9
Simple Interest Formula
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10
Converting Annual Interest Rate
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11
Total Amount Calculation with Simple Interest
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