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Example 1: Find simple interest on Rs. 3000 at 7% rate of interest for one year.

Solution: Let Principal = 3000 Rate of interest = 7%

Simple interest

Example 2: Find simple interest on Rs. 10,000 at the rate of 5% for 5 years. Also find the amount for 5 years.

Solution: Let Principal = 10,000 Rs. Rate = 5% Time

Amount of simple interest for 5 years is Interest

Hence the amount after 5 years

Example 3: Find simple interest on Rs. 156,00 for years at the rate of 5% per annum. Also find total amount.

Solution: Let Principal = 15,600 Rate = 5% Time = years Simple interest for 5 years

Amount

Example 4: Find simple interest on Rs. 8,000 for 40 days, at 10% per annum.

Solution: Let Principal = 8,000 Rs.

Rate = 10% per annum Time = 40 days Simple interest

In order to solve simple interest problems, you should be able to:

convert percents to decimals solve multi-step equations equations

There are several types of interest problems. This lesson will deal with solving simple interest problems. There are four variables in a simple interest equation and you will be given information about three of those variables. By knowing values for three of the variables, you can then solve for the fourth variable. The formula for simple interest problems is:

I is the amount of interest the account earns. P is the principle or the amount of money that is originally put into an account. r is the interest rate and must ALWAYS be in a decimal form rather than a percent. t is the amount of time the money is in the account earning interest.

Suppose a bank is offering its customers 3% interest on savings accounts. If a customer deposits $1500 in the account, how much interest does the customer earn in 5 years?

In this problem, we are given the interest rate (r), the amount put into the account (P), and the amount of time (t). However, before we can put these

values into our formula, we must change the 3% to a decimal and make it 0.03. Now we are ready to go to the formula.

So after 5 years, the account has earned $225 in interest.

If we want to find out the total amount in the account, we would need to add the interest to the original amount. In this case, there would be $1725 in the account. Keep in mind that our formula is only for the amount of interest. The formula can also be solved for other variables as in the examples below.