Algebra 1 : How to find simple interest

Study concepts, example questions & explanations for Algebra 1

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Example Questions

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Example Question #43 : Monetary Percentage

A bank account begins at $175, and it earns 15% interest. The accound holder then takes 76% of the available balance out. How much money is left in the bank account?

Possible Answers:

Correct answer:

Explanation:

The account begins at $175 and then earns 15% interest:

If the account owner takes out 76% of the available balance, that means that 24% off the account will be remaining:

$48.30 remains

Example Question #44 : Monetary Percentage

Exactly one year ago, John placed $8,000 into an investment account. Over the past year, the investments in his account have increased in value by 12%. How much money does he have now?

Possible Answers:

Correct answer:

Explanation:

John started out with $8,000 and increased it by 12% after a year. This indicates that by the end of the year, he has 112% of $8,000 (The original $8,000 plus the 12% return from his investments). Convert 112% into its decimal equivalent of 1.12 and multiply it by $8,000 to get John's current savings amount:

Example Question #1 : How To Find Simple Interest

You borrow $800 from a friend and your friend charges you a simple interest of 8% at an annual rate. Assume that you don't pay any of it back, how much interest will you owe in three years?

Possible Answers:

Correct answer:

Explanation:

The formula for simple interest is

where  is the amount that's loaned to you,  is the annual interest rate, and  is the time (in years) interest accumulates. In this problem,

and

 

Plug these values in:

So in three years, you will owe an interest of $192.

Example Question #2 : How To Find Simple Interest

Jennifer has invested her money in an account that yields 5% interest per year. If she invested $12,000, how much interest will she yield? 

Possible Answers:

Correct answer:

Explanation:

To solve this, multiply 12,000 by the decimal equivalent of 5% (.05). This gives a total interest of $600.

Example Question #47 : Monetary Percentage

You take a loan of $5,000 from your bank to buy a car. Your bank charges you interest at an annual rate of 3.5%.  How much interest will you accrue in three years, assuming that you haven't paid any of the principal back?   (Use simple interest, not compound.)

Possible Answers:

Correct answer:

Explanation:

The formula in calculating interest is

,

where  is the principal,  is the annual interest rate in decimal form, and  is number of years the principal accrues interest.  In this problem, , , and .

To find the interest, plug these values into the equation:

Therefore the accrued interest is $525.

Example Question #3 : How To Find Simple Interest

If you deposit into a savings account that yields 5% annual interest, how much interest will you earn in  years?

Possible Answers:

Correct answer:

Explanation:

When finding simple interest, we use the following formula:

 


The principal (P) equals the amount we deposit or invest.  In this case,

 

The rate (R) is the percentage rate at which the principal increases or decreases.  In this case,

because we must convert 5% into decimal form. 

 

The time (T) equals the number of years the money is accruing interest.  In the case,

 

So, according to the formula above

 

Therefore, the total interest earned is $375.

 

Example Question #4 : How To Find Simple Interest

If a woman invests $2000 into a fund that has 5% annual interest, how much many can she expect to make from her investment, after 2 years?

Possible Answers:

Correct answer:

Explanation:

To calculate the amount of interest she earned, we use the formula:

, where  is the principal (the initial amount invested)  is the interest rate, and  is the amount of time, in years, passed.

Plug the given values into the above formula:

Remember, when calculating interest, percents needed to be converted to decimals.

Example Question #50 : Monetary Percentage

Sal invests $2000 in a fund and after a year, earns $140 of interest. What is the interest rate for the fund Sal invested in?

Possible Answers:

Correct answer:

Explanation:

To calculate the percent interest of Sal's account, we arrange the simple interest formula:

 

Solve for the interest rate,

Plug in the appropriate values

Simplify.

Example Question #5 : How To Find Simple Interest

Steve wants to earn $300 from the interest on his investments. If he invests $2000 in a fund with 5% interest per year, how long will Steve have to wait for the interest to be worth $300?

Possible Answers:

Correct answer:

Explanation:

To solve this problem, we use the equation for simple interest:

 

Since we know how much Steve has invested, how much interest he is looking to make, and his interest, we are solving for :

Plug in the appropriate values and solve:

Example Question #6 : How To Find Simple Interest

Oscar spent  on his credit card for a Valentine's Day on the town with his better half. If the monthly billing statement totalled  , what is the monthly interest on Oscar's card?

Possible Answers:

Correct answer:

Explanation:

To find the percent interest, we want to determine the cash value,of the interest and divide that by the card balance before interest was accrued: 

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