Simple Interest Basics
What is the formula for simple interest?
I=Prt
Which variable of the formula (I, P, r, or t) needs to be found to solve the following problem?
Susan opens a savings account with $900. She earned $54 in 1.5 years. What is the annual interest rate?
r
If you deposit $200 in a bank at an interest rate of 5% for 3 years, how much interest will you earn?
$30
If $800 earns $128 in 4 years, what is the interest rate?
4%
Which of the following will not affect the simple interest earned?
a. Principal amount
b. Interest rate
c. Time period
d. Bank location
bank location
Principal; initial/starting amount
Rewrite the formula inserting the following numbers in the correct place.
Taylor deposits $250 in her savings account. The account earns 2.5% simple interest per year. How much interest does she earn after 4 years?
I = $250 x 0.025 x 4
What is the interest earned on $750 at 8% for 3 years?
$180
If the simple interest on a loan is $60 and the principal is $300, what is the rate if the time is 2 years?
5%
Convert 3.575% to a decimal.
0.0375
What does "r" represent in the formula? Define what it means.
rate; annual interest rate
Rewrite the formula inserting the following numbers in the correct place.
A bank offers a savings account with 2% interest. If James puts $1,000 in the account, how long will it take him to make $100 in interest?
100 = 1,000 x 0.02 x t
What is the total amount received after 4 years if the principal is $250 and the rate is 6%?
$310
A bank offers a savings account with 2% interest. If James puts $1,000 in the account, how long will it take him to make $100 in interest?
5 years
If you invest $500 in a savings account with an interest of 4.5%, what is your account's balance after 3 years?
$567.50
What does "t" represent in the formula? Define what it means.
time in years
Which variable of the formula (I, P, r, or t) needs to be found to solve the following problem?
Carly opens an account with $600. The rate is 4% per year. How long does it take Carly to earn $72?
t; time
If $1,200 is invested at a 3% rate for 2 years, how much interest is earned?
$60
How long will it take to earn $100 in interest on a $400 investment at a 5% simple interest rate?
5 years
Convert 0.0875 to a percentage.
8.75%
Explain why understanding simple interest is important in the real world.
Answers may vary.
Rewrite the formula inserting the following numbers in the correct place.
Rachel places $5,500 in a savings account for 42 months. She earns $893.75 in interest. What is the annual interest rate?
$893.75 = $5,500 x r x 3.5
Taylor deposits $250 in her savings account. The account earns 2.5% simple interest per year. How much interest does she earn after 4 years?
$25
Rachel places $5,500 in a savings account for 30 months. She earns $893.75 in interest. What is the annual interest rate?
6.5%
If you invest $1575 in a savings account with an interest of 1.5%, what is your account's balance after 2 years?
$1622.25