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Simple Interest Calculations Quiz

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Questions and Answers

What is the simple interest for a principal of $1,000 at an interest rate of 7% over 2 years?

$100
$70
$150
$140 (correct)

What is the correct formula for calculating simple interest?

(Principal × Rate) + Time
Principal × Rate × Time (correct)
Principal + (Principal × Rate × Time)
Principal × (Rate + Time)

How much interest is earned on a principal of $250 at an interest rate of 2.85% over 3 years?

$19.25
$8.55
$27.50
$21.37 (correct)

If the interest rate is increased to 10% for the same principal of $1,000 over 2 years, what is the new simple interest amount?

<p>$200 (D)</p> Signup and view all the answers

Which of the following factors does NOT affect the calculation of simple interest?

<p>Market conditions (A)</p> Signup and view all the answers

Flashcards

Principal

The initial amount of money invested or borrowed.

Interest Rate

The percentage rate at which interest is earned or charged on the principal.

Time

The duration for which the principal is invested or borrowed.

Simple Interest

The amount of interest earned or charged over a specific period.

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Total Amount

The total amount payable or receivable at the end of the investment or loan period, which includes both the principal and the accumulated interest.