Question

When calculating simple interest, what must you do if you want to invest for months instead of years?

Answer 1

When calculating simple interest for a period in months instead of years, you need to adjust the time component in the formula. The standard formula for calculating simple interest is:

\[
I = P \times r \times t
\]

where:
- \( I \) = interest earned
- \( P \) = principal amount (the initial investment)
- \( r \) = annual interest rate (as a decimal)
- \( t \) = time in years

If you want to calculate interest for a period in months, you should convert the time from months to years. Since there are 12 months in a year, you can do this by dividing the number of months by 12.

For example, if you're investing for 6 months, you would use:

\[
t = \frac{6 \text{ months}}{12} = 0.5 \text{ years}
\]

Then you would substitute this into the formula:

\[
I = P \times r \times \left(\frac{\text{number of months}}{12}\right)
\]

So ensure you convert months to years when using the simple interest formula.