Algebra 1 : How to find simple interest

Study concepts, example questions & explanations for Algebra 1

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Example Questions

Example Question #2711 : Algebra 1

 

Oscar takes out a loan from the bank for . If the end of the month billing statement has a total balance of , what is the monthly interest rate for the loan?

Possible Answers:

Correct answer:

Explanation:

The monthly interest rate is the percent of the principal value of the loan added on to the total balance each month. We can determine the interest rate by dividing the interest accrued by the initial loan amount:

 

Example Question #51 : Monetary Percentage

 

Carly invested in a savings account, which, within a years' time increased by roughly . If at the end of the year, Carly withdrew of the total balance in the savings account, what is the remaining balance?

Possible Answers:

 

Correct answer:

Explanation:

The first step of this problem is to determine the increased balance in the savings account:

Now that we know the end balance, we can determine the amount left after withdrawal, which should be of the total balance with interest:

Example Question #2713 : Algebra 1

 

Eric used his credit card for a car repair with a total cost of . Eric's credit card billing statement the following month had a balanced of . What was the percent interest for that month?

Possible Answers:

Correct answer:

Explanation:

The monthly interest rate is the percent of the principal value of the loan  added on to the total balance each month. We can determine the interest rate by dividing the interest accrued by the initial loan amount:

 

Example Question #11 : How To Find Simple Interest

 

Jennifer took out a personal loan from the bank for with an annual interest rate of . After one year of nonpayment, Jennifer pays off of the balance, including accrued interest. What is the balance of the loan after the payment is made?

Possible Answers:

Correct answer:

Explanation:

First we want to calculate the accrued annual interest. At annual interest, we can find the cash value of the interest as such:

Accured interest plus the loan amount:

We can now calculate the remaining balance after payment as such:

Example Question #51 : Monetary Percentage

 

Cody has fallen behind on his student loan payments and has not made a payment in a year. The original balance of  has accrued interest and increased to . If Cody does not make any payments this year, what will be the year-end balance of the loan?

Possible Answers:

Correct answer:

Explanation:

To calculate next year's balance with added interest, we want to know the interest rate. We can determine this by dividing the interest already accrued by the initial loan balance:

Now that we know the annual interest rate, we can calculate the balance after one year with interest:

Once we've calculated the interest, we can add it to our starting balance to calculate the new balance with added interest:

Example Question #2716 : Algebra 1

 

Brenda forgot to pay her monthly credit card bill (oops!) and her balance increased to . If the monthly interest rate on the card is , what was Brenda's initial balance?

Possible Answers:

Correct answer:

Explanation:

To find the original balance, we can use a simple interest formula, with our initial balance being . Then we just need to solve for .

 

Example Question #2721 : Algebra 1

Trevor wants to buy a car that costs $4,000. He spends $1,000 of his own money, and borrows the rest from his parents at 6% interest.  What will be the total cost of the car when he finishes paying back the loan?

Possible Answers:

Correct answer:

Explanation:

Trevor needs to pay 6% interest on $3,000 that he is borrowing which amounts to an additional $180, bringing the total cost to $4,180.  

Example Question #11 : How To Find Simple Interest

Tanya opened a credit card with 16% yearly interest to purchase something on sale at a large department store for . Unfortunately, she forgot to pay her bill all year. How much will she end up paying for the item if she pays it off now?

Possible Answers:

Correct answer:

Explanation:

When calculating interest on an item you need to multiply the amount of the item by the interest in decimal form. 16% is equivalent to .16.

. The second step is to add the interest to the original amount of the item , which would give you an answer of .

 

You can also solve this problem in one step by multiplying the original price of the item by 1.16. This number means that you are paying for 100% of the item plus the 16% interest. .

Example Question #12 : How To Find Simple Interest

Find the simple interest earned if you deposit $2000 into a bank at an annual rate of 5% for 3 years.

Possible Answers:

Correct answer:

Explanation:

To find the simple interest, we use the formula

or

where the principal is the initial amount we desposit, the rate is the percentage of interest accruing, and the time is the number of years.

We know

So we substitute, and we get

Therefore, the simple interested earned is $300.

Example Question #13 : How To Find Simple Interest

You deposit $400 at the bank that accrues an interest of 5% every year.  How much interest will you have earned in 10 years?

Possible Answers:

Correct answer:

Explanation:

To find the simple interest accrued, we will use the formula

or

We know the following

We can substitute into the formula.  We get

Therefore, the amount of interest earned is $200.

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