Simple interest is I = Prt. Interest equals principal times rate times time, with the rate as a decimal and time in years. $400 at 5% for 3 years is 400 × 0.05 × 3 = $60 of interest. The new total is $460. Percent as a conversion is in percent problems.
Keep the units honest
Six months is 0.5 years, not 6. 18 months is 1.5. If the rate is 4% per year and the time is in months, convert the time before you multiply. Unit mix-ups of this kind are in unit conversions.
Compound interest adds interest to the balance and then charges interest on that new balance. That formula is different, in compound interest. Word-problem setup around money is in setting up word problems.
The bottom line
Decimal rate, time in years, multiply by the principal. Add I to P only if the question asked for the new total.
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