Simple Interest Test Questions With Answers

1. Mr. Smith deposited $40, 000 in a bank and earned simple interest at 7 % per annum for two years. Calculate the interest earned at the end of the period.

$ 4000

$2800

$5600

$3400

$200

Interest is PRT/100, 40000 X 7 X 2 /100 = 5600

Explanation

Interest is PRT/100, 40000 X 7 X 2 /100 = 5600

2. How much simple interest is due on a loan of US$120 for two years if the annual rate of interest is 5 ½ %.

$12

$13.20

$26.40

$26

$33

I = PRT/100 P= 120, R= 5.5%, Time = 2 years, Warning if time in months always express it iterms of years, by put the month value over 12

Explanation

I = PRT/100 P= 120, R= 5.5%, Time = 2 years, Warning if time in months always express it iterms of years, by put the month value over 12

3. A man wishes to invest $1500. He can invest in uLintplus Investment club, which pays simple interest of 8%for 3 years. What is the amount in his account after 3 years?

$18321

$1860

$1830

$1524

$5024

I = 1500 X 8 X 3/100 I = $360 Amount = Principal + Interest A = 1500 + 360 1860

Explanation

I = 1500 X 8 X 3/100 I = $360 Amount = Principal + Interest A = 1500 + 360 1860

4. When you borrow money from the bank you pay

When you borrow money from the bank, you are required to pay interest. Interest is the additional amount of money that the bank charges for lending you the money. It is a percentage of the borrowed amount and is added to the total repayment amount. Simple interest is a straightforward method of calculating interest, where the interest is calculated only on the initial borrowed amount and does not take into account any additional factors such as compounding.

Explanation

When you borrow money from the bank, you are required to pay interest. Interest is the additional amount of money that the bank charges for lending you the money. It is a percentage of the borrowed amount and is added to the total repayment amount. Simple interest is a straightforward method of calculating interest, where the interest is calculated only on the initial borrowed amount and does not take into account any additional factors such as compounding.

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5. Principal + Interest = ___________________

The sum of the principal (the original sum of money borrowed or invested) and the interest (the cost of borrowing the money or the return on investment) is called the "Amount." This represents the total money after the interest has been added to the principal. The formula is often used in financial contexts, such as loans or savings, where the amount is what is owed or accumulated over time.

Explanation

The sum of the principal (the original sum of money borrowed or invested) and the interest (the cost of borrowing the money or the return on investment) is called the "Amount." This represents the total money after the interest has been added to the principal. The formula is often used in financial contexts, such as loans or savings, where the amount is what is owed or accumulated over time.

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6. .............................the percent charged or earned

The term "rate of interest" refers to the percentage charged or earned in relation to a loan or investment. It is commonly used to calculate the amount of interest that will be accrued over a specific period of time. The word "rate" in this context is synonymous with "percentage" and is used to indicate the proportion or fraction of the principal amount. Therefore, the correct answer is "Rate of interest" as it accurately describes the concept of the percent charged or earned.

Explanation

The term "rate of interest" refers to the percentage charged or earned in relation to a loan or investment. It is commonly used to calculate the amount of interest that will be accrued over a specific period of time. The word "rate" in this context is synonymous with "percentage" and is used to indicate the proportion or fraction of the principal amount. Therefore, the correct answer is "Rate of interest" as it accurately describes the concept of the percent charged or earned.

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7. Calculate the time T for $1000 to become$1300 at a rate of 5 %

3 years

6 years

9 years

6. 5 months

10 years

Time T = SI X 100/P X R
Amount = P + I
1300 = 1000 + I
I =300

Substitute in formula
T = 300 X 100 / 1000 X 5

= 6 years

Explanation

Time T = SI X 100/P X R
Amount = P + I
1300 = 1000 + I
I =300

Substitute in formula
T = 300 X 100 / 1000 X 5

= 6 years

8. The amount of money borrowed or invested is called

The amount of money borrowed or invested is referred to as the principal. This is the initial sum of money that is either borrowed from a lender or invested by an individual. The principal amount is the basis on which interest or returns are calculated. It is an essential concept in finance and plays a significant role in various financial transactions such as loans, mortgages, and investments.

Explanation

The amount of money borrowed or invested is referred to as the principal. This is the initial sum of money that is either borrowed from a lender or invested by an individual. The principal amount is the basis on which interest or returns are calculated. It is an essential concept in finance and plays a significant role in various financial transactions such as loans, mortgages, and investments.

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9. Find the principle amount that accounts to $2040 in 6 months at 4 %

$ 200

$2000

$1300

$2400

$1020

Explanation