Task 3: Unit 2: Lesson 3 Simple InterestOnline version Test your knowledge on simple interest word problems using I=PRT! by Kristine Vester 1 What does the 'P' in the formula I=PRT represent? a Interest rate b Total amount c Time period d Principal amount 2 In the formula I=PRT, what does 'R' stand for? a Rate of interest b Principal amount c Total amount d Time period 3 If you invest $500 at a 5% interest rate for 3 years, what is the interest earned? I=PRT a $100 b $150 c $75 d $50 4 If the principal is $1,000, rate is 4%, and time is 2 years, what is the interest? I=PRT a $40 b $60 c $80 d $100 5 If the interest earned is $450, the principal is $1,500, and the rate is 3%, what is the time period? a 20 years b 5 years c 10 years d 15 years 6 Which of the following is NOT a component of the simple interest formula? a Compound interest b Time c Rate d Principal 7 What do you earn when you have money in a Savings Account? a Rewards points for spending. b Interest paid by the bank. c Dividends from stocks. d Fees for account maintenance. 8 Who pays interest when borrowing money? a The borrower pays interest to the government. b The lender pays interest to the borrower. c The bank pays interest to the government. d The borrower pays interest to the lender. 9 Why do banks pay interest on Savings Accounts? a To cover operational costs. b To attract more customers. c To comply with government regulations. d For the temporary use of deposited money. 10 What happens when you borrow money? a You incur a debt and pay interest. b You gain equity in an asset. c You receive a bonus from the lender. d You earn dividends on your loan. 11 What type of account typically earns interest? a Credit Card Account. b Loan Account. c Checking Account. d Savings Account. 12 What is interest? a A fee for late payments. b A penalty for borrowing. c A tax on savings. d Money paid regularly for the use of borrowed money. 13 What does maturity refer to in a loan? a The duration of the loan. b When the loan is due for repayment. c The interest rate applied. d The amount of money borrowed. 14 What is the principal in a loan? a The amount of money borrowed. b The repayment schedule. c The total interest paid. d The maturity date. 15 How is simple interest calculated? a Interest that compounds over time. b Interest based on total loan amount. c Interest paid annually on the principal amount. d Interest calculated monthly. 16 What is the relationship between risk and interest rates? a Higher risk leads to higher interest rates. b Interest rates are fixed regardless of risk. c Lower risk leads to higher interest rates. d Risk does not affect interest rates. 17 What must be paid back at maturity? a Only the interest amount. b Only the principal amount. c A penalty fee. d All borrowed money plus interest. 18 What type of interest is calculated only on the principal? a Fixed interest. b Simple interest. c Compound interest. d Variable interest. 19 What does a higher interest rate indicate? a A longer repayment period. b Lower risk associated with the loan. c Increased risk associated with the loan. d A government-backed loan.
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