Question

Principal: $225, Interest Rate: 6%, Time: 2 years.

What is simple interest? I know it is something related to PxRxT or something like that. ​

Answer 1

Simple interest is a type of interest that is calculated only on the principal amount of a loan or investment, without taking into account any additional interest that has been earned on the principal. To calculate simple interest, you multiply the principal amount by the interest rate and the length of time the interest is being applied. For example, if you have a principal of $225, an interest rate of 6%, and a time of 2 years, the simple interest would be calculated as follows:

$225 x 6% x 2 years = $27.

In this case, the simple interest on the $225 principal would be $27. This means that after 2 years, you would owe $252 in total, including the original principal and the interest that has been earned on it. Simple interest is typically used for short-term loans or investments, where the interest is paid or earned at regular intervals, such as monthly or annually.

Answer 2

$27

Explanation:

Simple interest is a way of calculating the interest charge on a loan or investment. It is calculated by multiplying the principal amount by the interest rate and the time period. In your example, the simple interest calculation would be $225 * 6% * 2 years = $27.