What is the formula for calculating simple interest?

Question

BlackTom AI · Accepted Answer

The question asks for the formula used to calculate simple interest.
First, note that the available answer options are missing, so there is no list of choices to evaluate against each other.
Next, consider the provided answer:"Principal multiply Rate multiply Time". This expresses the core idea of the simple interest calculation as a product of principal (P), rate (R), and time (T).
However, precision matters: in many contexts, the standard formula is SI = P × R × T, where R is the rate expressed as a decimal (for example, 5% becomes 0.05). When the rate is given as a percentage, the formula is often written as SI = P × R × T ÷ 100, to account for the percent conversion.
Thus, if R is in decimal form, the expression P × R × T exactly matches the correct formula. If R is given as a percentage, the more common presentation is P × R × T ÷ 100, which yields the same numeric result after converting the percentage to a decimal.
The key conceptual point is that simple interest grows linearly with principal, the rate of return, and the time period, as captured by multiplying these three quantities together. A frequent source of error is omitting the division by 100 when R is expressed as a percentage or misinterpreting time units.
Because there are no alternative options to compare, we cannot assess other potential statements; with the given information, the essential idea behind the formula is correctly captured by the product of P, R, and T, with the caveat about how R is represented (decimal vs. percentage).

BMA06E1_CPL - Business Math - CPL Part 2 - Online Exam

What is the formula for calculating simple interest?

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