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 #61 : Monetary Percentage

You deposit $2000 in a bank that earns 12% interest every year.  How much interest will accrue in 5 years?

Possible Answers:

Correct answer:

Explanation:

To find the interest earned, we use the following formula

where P is the principal or amount deposited, R is the rate of interest earned, and T is the time in years.  Using this formula, we can substitute.  We get

Therefore, the amount of interested earned after 5 years is $1200.

Example Question #61 : Monetary Percentage

You deposit $1500 into a savings account.  The account earns 7% in interest annualy.  How much simple interest will you earn in 6 years?

Possible Answers:

Correct answer:

Explanation:

To find simple interest, we use the following formula:

where

 

Given what we know

we can substitute into the formula.  We get

 

Therefore, you earned a total of  in simple interest.

Example Question #62 : Monetary Percentage

You deposit $400 into a savings account.  The account earns 3% interest per year.  How much simple interest will you earn after 4 years?

Possible Answers:

Correct answer:

Explanation:

To find simple interest, we use the following formula:

where

 

Given what we know

we can substitute into the formula.  We get

 

Therefore, you earned a total of  in simple interest.

Example Question #63 : Monetary Percentage

You invest $550 in a savings account that accrues interest at a rate of 6% annually. How much interest will you earn after 3 years?

Possible Answers:

Correct answer:

Explanation:

To find simple interest, we use the following formula:

where

 

Given what we know

we can substitute into the formula.  We get

 

Therefore, you earned a total of  in simple interest.

Example Question #64 : Monetary Percentage

You deposit $700 in a savings account at a bank.  It accrues 4% interest annually.  How much simple interest will you earn after 2.5 years?

Possible Answers:

Correct answer:

Explanation:

To find simple interest, we use the following formula:

where

 

Given what we know

we can substitute into the formula.  We get

 

Therefore, you earned a total of  in simple interest.

Example Question #66 : Monetary Percentage

Joey received a savings bond that pays out 4% interest each year. The face value of the bond is $500. How much will Joey receive after holding the bond for one year?

Possible Answers:

Correct answer:

Explanation:

Convert 4% into a decimal...

4% = 0.04

...and multiply by the face value of the bond. If  is the interest paid after one year, the equation would look like this:

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