Chapter 6 - Simple Interest

P
I
r
t

=
=
=
=

Principal Interest
Interest
Rate (%)
Time (years)

Ex 1. You borrow $100, and after 1 year you return $100 + Interest (P + I)
Interest (Prt) = 100 x .05 x 1
Interest (Prt) = $5
Ex. 2 You borrow $750 for 24 months at 7%, how much is the interest?
Interest (Prt) = 750 x .07 x 2 (24/12)
Interest (Prt) = $105
Q1. How much interest will be earned on $8000 over a period of 4 months if the i
nterest rate is 6.596?
A1. Interest (Prt) = 8000 X 0.06596 x 0.33 (4/12) = $174
Q3. In how many months will $6000 earn interest of $2700 at 15% simple interest?
A3. t = ? p = 6000 r = 0.15 I = 2700
t = I/Pr
t = 2700/(6000x0.15)
t = 3 x 12 months
t = 36 months
Q7. A principal of $790 grew to $1000 in 14 months. What annual rateof simple in
terest was earned?
A7. r = ? P = 790 I = 210 t = 14/12
r = I/Pt
r = 210/(790x14/12)
r = 0.22784827
r = 22.78%
Q9. If 20000 was invested 82 days ago at a simple interest rate of 13.75%, what
would be the value of the investment today?
A9. t= 82days/365days r = 0.1375 P = 20000 S - ?
I = 20000 x 0.1375 x 82/365
I = 617.8082
I = 617.81
Ex 3. What Amount today is equivalent to $1500, 7 years ago at 3.5%?
7 Yrs ago
Today
-----------|--------------------|--------------------P=1500
S=?
S = P(1+rt)
S = 1500(1+(0.035x7)
S = 1867.50
Q10.