Learn how to solve simple interest problems using simple interest formula.

## Step by step guide to solve simple interest

- Simple Interest: The charge for borrowing money or the return for lending it.
- To solve a simple interest problem, use this formula:

Interest \(=\) principal \(\times\) rate \(\times\) time \( ⇒ \color{blue}{I=p \ × \ r \ × \ t}\)

### Example 1:

Find simple interest for \( $450\) investment at \(7\%\) for \(8\) years.

**Solution:**

Use Interest formula: \(\color{ blue }{I=prt }\)

P \(=$450\), r \(=7\%=\frac{7}{100}=0.07\) and t \(=8\)

Then: I \(=450 \ × \ 0.07 \ × \ 8=$252\)

### Example 2:

Find simple interest for \( $5,200\) investment at \(4\%\) for \(3\) years.

**Solution:**

Use simple interest formula: \(\color{ blue }{I=prt }\)

P \(=$5,200\), r \(=4\%=\frac{4}{100}=0.04\) and t \(=3\)

Then: I \(=5,200 \ × \ 0.04 \ × \ 3=$624\)

### Example 3:

Find simple interest for \($5,000\) investment at \(3\%\) for \(4\) years.

**Solution:**

Use simple interest formula: \(\color{ blue }{I=prt }\)

\( P=$5,000, r=3\%=\frac{3}{100}=0.03\) and \(=4\)

Then: \(I=5000×0.03×4=$600\)

### Example 4:

Find simple interest for \($900\) at \(3.5\%\) for \(5\) years.

**Solution:**

Use simple interest formula: \(\color{ blue }{I=prt }\)

\( P=$900, r=3.5\%=0.035\) and \(t=5\)

Then: \(I=900×0.035×5=$157.50\)

## Exercises

**Use simple interest to find the ending balance.**

- \($1,300\) at \(5\%\) for \(6\) years.
- \($5,400\) at \(7.5\%\) for \(6\) months.
- \($25,600\) at \(9.2\%\) for \(5\) years.
- \($240\) interest is earned on a principal of \($1500\) at a simple interest rate of \(4\%\) interest per year. For how many years was the principal invested?
- A new car, valued at \($28,000\), depreciates at \(9\%\) per year from original price. Find the value of the car \(3\) years after purchase.
- Sara puts \($2,000\) into an investment yielding \(5\%\) annual simple interest; she left the money in for five years. How much interest does Sara get at the end of those five years?

### Download Simple Interest Worksheet

## Answers

- \(\color{blue}{$1,690.00}\)
- \(\color{blue}{$5,602.50}\)
- \(\color{blue}{$37,376.00}\)
- \(\color{blue}{4 \ years}\)
- \(\color{blue}{$20,440}\)
- \(\color{blue}{$500}\)