What is the formula for calculating Simple Interest?

The formula for calculating Simple Interest is given by the equation:

Simple Interest = Principal x Rate x Time

In this context, "Principal" refers to the initial amount of money that is invested or loaned, "Rate" represents the interest rate expressed as a decimal, and "Time" is the duration for which the interest is calculated, usually expressed in years.

The correct answer reflects this formula as it combines all three essential elements: Principal, Interest (which corresponds to the interest rate in the complete equation), and Time. By multiplying these components together, you can accurately determine the total amount of simple interest accrued over a specified period.

Thus, when you calculate simple interest using the correct formula, you are effectively finding out how much extra money is earned or owed based on the initial amount and the rate of interest over a given period.