SIMPLE INTEREST

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Simple Interest formula

We can use the formula to find the Interest in each problem:

• I = PRT

Where I = interest

• P = principal
• R = Rate
• T = Time

SOLUTION

1. A bank is offering 2.5% simple interest on a savings account, If you deposit $5000, how much interest will you earn in one year?

Given

• P = 500
• R = 2.5%
• T = One year or 0.01

Solve

• I = PRT
• 500 × 2.5
• 1250 × 0.01
• 12.5

Therefore, the Interest is 12.5

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2. To buy a car, Jessica borrowed $15,000 for 3 years at an annual simple interest rate of 9%. How much interest will she pay if she pays the entire loan off at the end of the third year? What is the total amount that she will repay?

Given

• P = 15,000
• R = 9%
• T = 3 years or 0.03

Solve

• I = PRT
• 15,000 × 9
• 13,5000 × 0.03
• 4500

Therefore, $4500 is the total amount.

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3. Nancy invested 6000 in a bond at a yearly rate of 3%. She earned 450 in interest. How long was the money invested?

Given

• P = 6000
• I = 450
• R = 3% or 0.03

Solve

• I = PRT
• 450 = 6000 × 0.03 × T
• 450 = 180 × T

• 2.5

Therefore, it will took 2.5 years.