WP2
Simple Interest
The basic formula is interest = principal x rate x time. Interest and principal are in dollars. The rate (an annual percentage) and time (in years) should be converted to decimal form. This formula is provided in the test's drop-down formula sheet.
The principal is the amount on which the interest is paid or earned. To calculate the amount of interest, multiply the principal times the decimal rate (e.g. 0.04) times the time in years. If you are asked to calculate the interest rate, convert the i = prt formula to r = i/(pt).
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