Which equation represents simple interest?

Which equation represents simple interest?

• A. Simple interest = principal × rate.
• B. Simple interest = principal × time.
• C. Simple interest = principal × rate × time.
• D. Simple interest = principal × rate × 100.

Answer: (C)

Simple interest grows with three factors: how much money you start with, the rate at which it earns interest, and how long the money is invested or borrowed. The standard formula is I = P × r × t, where I is the interest, P is the principal, r is the rate (as a decimal), and t is the time in years. This form is the best because it shows how each piece directly affects the total interest earned over the period. The other expressions miss one of these pieces. Leaving out time ignores how long the money earns interest; leaving out rate ignores how fast it grows; and including a factor like 100 isn’t part of the standard calculation (it would misstate the result unless you’re converting a percentage to a decimal, which isn’t part of the core formula). Example: if you start with $1,000, the rate is 5% (0.05), and the time is 2 years, then I = 1000 × 0.05 × 2 = $100. This illustrates how principal, rate, and time together determine the interest.

Simple interest grows with three factors: how much money you start with, the rate at which it earns interest, and how long the money is invested or borrowed. The standard formula is I = P × r × t, where I is the interest, P is the principal, r is the rate (as a decimal), and t is the time in years. This form is the best because it shows how each piece directly affects the total interest earned over the period.

The other expressions miss one of these pieces. Leaving out time ignores how long the money earns interest; leaving out rate ignores how fast it grows; and including a factor like 100 isn’t part of the standard calculation (it would misstate the result unless you’re converting a percentage to a decimal, which isn’t part of the core formula).

Example: if you start with $1,000, the rate is 5% (0.05), and the time is 2 years, then I = 1000 × 0.05 × 2 = $100. This illustrates how principal, rate, and time together determine the interest.