Malia Hire Purchase and Simple Interest

Practice questions exploring the formulas and variables associated with simple interest and hire purchase calculations as presented in the lecture notes.

What is the general formula for calculating simple interest ($I$)?

$$I = P \times R \times T$$

In the simple interest formula, what does the variable $P$ represent?

The principal amount, which is the initial investment or loan.

In the context of the simple interest formula, what does the variable $R$ represent?

The annual rate expressed as a percent.

In the simple interest formula, what does the variable $T$ represent?

The time in years.

What is the formula to calculate Time ($T$) when simple interest, principal, and rate are known?

$$T = \frac{SI \times 100}{P \times R}$$

What is the formula to calculate the Rate ($R$) in a simple interest calculation?

$$R = \frac{SI \times 100}{P \times T}$$

What is the formula used to calculate the Principal ($P$) based on simple interest?

$$P = \frac{SI \times 100}{R \times T}$$

Using the example provided, if simple interest is $\$200$, the rate is $8\%$, and the time is $5 \text{ years}$, what is the principal?

$$P = \frac{200 \times 100}{5 \times 8} = \frac{20,000}{40} = \$500$$

In the provided example, how is the 'Total paid' determined once the principal is calculated?

$\text{Total paid} = \text{Principal} + \text{Simple Interest}$, which is $\$500 + \$200 = \$700$