Key Concepts

• Simple interest
  • If an amount of money, [latex]P[/latex] , the principal, is invested for a period of [latex]t[/latex] years at an annual interest rate [latex]r[/latex] , the amount of interest, [latex]I[/latex] , earned is [latex]I=Prt[/latex]
  • Interest earned according to this formula is called simple interest.

Glossary

simple interest

If an amount of money, [latex]P[/latex] , the principal, is invested for a period of [latex]t[/latex] years at an annual interest rate [latex]r[/latex] , the amount of interest, [latex]I[/latex] , earned is [latex]I=Prt[/latex] . Interest earned according to this formula is called simple interest.