What is the formula used to calculate simple interest?

• A. I = Prt
• B. I = P + rt
• C. I = P/r
• D. I = R/t

Answer: (A)

The formula for calculating simple interest is represented as I = Prt, where:

• I stands for the interest earned,

• P represents the principal amount (the initial sum of money),

• r is the rate of interest (expressed as a decimal), and

• t is the time the money is invested or borrowed for, typically expressed in years.

This formula effectively shows how interest accumulates over time based on the original investment or loan amount. It shows a linear relationship, meaning that if any of the variables (P, r, or t) increases, the amount of interest (I) will also increase proportionally.

For example, if you invest $1,000 (P) at an interest rate of 5% per year (r) for 3 years (t), using the formula, you can calculate the simple interest as follows:

I = 1000 * 0.05 * 3 = $150.

Thus, using the formula I = Prt accurately reflects how simple interest is calculated, making it the correct choice among the options provided.