In consumer arithmetics is the simple interest always smaller than the principle?
It depends on the interest rate, which does not usually exceed 25%, and the duration. The longer the loan lasts, the more the (simple) interest would be.
For example, at 11% simple interest for a principle of $100, the interest is 100*(0.11*10) = $110, which exceeds the simple interest.
An investment adviser invested $14,000 in two accounts. One investment earned 5% annual simple interest, and the other investment earned 2.5% annual simple interest. The amount of interest earned for 1 year was $540. How much was invested in each account?
2.300. 1.500. 2.500
In consumer arithmetic, the simple interest is not always smaller than the principal amount. It depends on the interest rate and the length of time for which the principal is invested or borrowed.
To calculate simple interest, you need three pieces of information: the principal amount, the interest rate, and the time period. The formula for calculating simple interest is:
Simple Interest = (Principal) x (Interest Rate) x (Time)
If the interest rate is positive and the time period is greater than zero, then the simple interest will be positive. In this case, the simple interest will be added to the principal amount.
However, if the interest rate is negative or the time period is zero or negative, then the simple interest will be negative. In this case, the simple interest will be deducted from the principal amount.
So, the simple interest can either increase or decrease the principal amount depending on the conditions mentioned above. It is not always smaller than the principal.
To determine whether the simple interest is smaller or greater than the principal, you need to know the specific values for the principal amount, interest rate, and time period.