How to Solve Simple Interest Problems? (+FREE Worksheet!)

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  $$⇒ \color{blue}{I=p \ × \ r \ × \ t}$$

Simple Interest – 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: $$I=450 \ × \ 0.07 \ × \ 8=252$$

Simple Interest – 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: $$I=5,200 \ × \ 0.04 \ × \ 3=624$$

Simple Interest – 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 $$t=4$$
Then: $$I= 5,000 ×0.03×4=600$$

Simple Interest – Example 4:

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

Solution:

Use simple interest formula: $$\color{ blue }{I=prt }$$
$$P=900, r=3.5\%=\frac{3.5}{100}=0.035$$ and $$t=5$$
Then: $$I=900×0.035×5=157.50$$

Exercises for Solving Simple Interest

Use simple interest to find the ending balance.

1. $$1,300$$ at $$5\%$$ for $$6$$ years.
2. $$5,400$$ at $$7.5\%$$ for $$6$$ months.
3. $$25,600$$ at $$9.2\%$$ for $$5$$ years.
4. $$240$$ 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?
5. 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.
6. 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?

1. $$\color{blue}{1,690.00}$$
2. $$\color{blue}{5,602.50}$$
3. $$\color{blue}{37,376.00}$$
4. $$\color{blue}{4 \ years}$$
5. $$\color{blue}{20,440.00}$$
6. $$\color{blue}{500.00}$$

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