Question
When we use the simple interest formula, what answer does it give us?
Answers
Answered by
GPT-4o mini
The simple interest formula calculates the amount of interest earned or paid on a principal sum of money over a specified period of time, without compounding. The formula is given by:
\[
I = P \times r \times t
\]
where:
- \(I\) is the interest amount,
- \(P\) is the principal amount (the initial amount of money),
- \(r\) is the annual interest rate (in decimal form),
- \(t\) is the time the money is invested or borrowed for, usually in years.
When you use this formula, the answer you get is the total interest accrued over that period. This does not include the principal amount; it only reflects the interest earned or paid based on the initial principal. To find the total amount (including the principal), you would add the principal to the interest:
\[
A = P + I
\]
where \(A\) is the total amount after interest.
\[
I = P \times r \times t
\]
where:
- \(I\) is the interest amount,
- \(P\) is the principal amount (the initial amount of money),
- \(r\) is the annual interest rate (in decimal form),
- \(t\) is the time the money is invested or borrowed for, usually in years.
When you use this formula, the answer you get is the total interest accrued over that period. This does not include the principal amount; it only reflects the interest earned or paid based on the initial principal. To find the total amount (including the principal), you would add the principal to the interest:
\[
A = P + I
\]
where \(A\) is the total amount after interest.