Calculating simple interest - GMAT Quantitative
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Jessica deposits $5,000 in a savings account that collects 6% simple interest. How much money will she have accumulated after 5 years?
Jessica deposits $5,000 in a savings account that collects 6% simple interest. How much money will she have accumulated after 5 years?
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Grandpa Jack wants to help pay for college for his grandson, Little Jack. Little Jack is currently 8 years old. Grandpa Jack makes a one-time deposit into an account that earns simple interest every year. Grandpa Jack invests $10,000 now and in ten years, that will grow to $15,000. What rate of simple interest did Grandpa Jack receive?
Grandpa Jack wants to help pay for college for his grandson, Little Jack. Little Jack is currently 8 years old. Grandpa Jack makes a one-time deposit into an account that earns simple interest every year. Grandpa Jack invests $10,000 now and in ten years, that will grow to $15,000. What rate of simple interest did Grandpa Jack receive?
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To calculate simple interest, the formula is
 "FV= PV (1+it)")
where 
stands for Future Value, 
stands for Present Value, 
stands for the interest rate, and 
stands for the number of periods (in this case years). So plugging in,
Solving this we get 
or 5%
ALTERNATE SOLUTION:
Another way of finding this is to calculate the amount of interest per year. Since this is simple interest, Grandpa Jack earns the same amount of interest per year. The total interest earned is 15,000-10,000= 5,000. $5,000 over 10 years, equates to $500 per year. $500 divided by the original $10,000 is .05, or 5%.
To calculate simple interest, the formula is
where
Solving this we get
or 5%
ALTERNATE SOLUTION:
Another way of finding this is to calculate the amount of interest per year. Since this is simple interest, Grandpa Jack earns the same amount of interest per year. The total interest earned is 15,000-10,000= 5,000. $5,000 over 10 years, equates to $500 per year. $500 divided by the original $10,000 is .05, or 5%.
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John has 
to invest for 
years for 
return. How much simple interest will his investment yield?
John has
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Simple interest formula: 
Simple interest formula:
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How many years would it take Marissa to make 
in interest using a simple interest investment of 
in principal at 5% return?
How many years would it take Marissa to make
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Simple interest formula is: 
Therefore, solving for the time factor:
Simple interest formula is:
Therefore, solving for the time factor:
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Using the simple interest formula, what initial investment does Terry have to make to earn 
in interest if there is an 
return for 
years?
Using the simple interest formula, what initial investment does Terry have to make to earn
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Simple interest formula: 
Therefore, solving for the principal factor in the equation:
Simple interest formula:
Therefore, solving for the principal factor in the equation:
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What return does Florence have to yield in order to make 
in interest off of a simple investment of 
for 
years?
What return does Florence have to yield in order to make
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Simple interest formula: 
Therefore, solving for the rate factor in the equation:
Simple interest formula:
Therefore, solving for the rate factor in the equation:
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Jesse has 
to invest for 
years for 
return. How much simple interest will his investment yield?
Jesse has
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Simple interest formula: 
Simple interest formula:
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How many years would it take Julissa to make 
in interest using a simple interest investment of 
at a 
return?
How many years would it take Julissa to make
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Simple interest formula is: 
Therefore, solving for the time factor:
Simple interest formula is:
Therefore, solving for the time factor:
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How much interest would an investment yield if the principal of 
is invested for 
years at a 
simple interest?
How much interest would an investment yield if the principal of
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How many years does it take an investment of 
to yield 
in interest if invested at a 
simple interest rate?
How many years does it take an investment of
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Remember the simple interest formula, where I is interest, p is principle, r is rate, and t is time:
Remember the simple interest formula, where I is interest, p is principle, r is rate, and t is time:
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What rate does Johnny need if he would like to yield 
in interest from a principal of 
in 
years?
What rate does Johnny need if he would like to yield
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A bank offers a business a loan in the amount of $13,000 with a simple annual interest rate of 9%. How much will the business owe the bank after 3 years?
A bank offers a business a loan in the amount of $13,000 with a simple annual interest rate of 9%. How much will the business owe the bank after 3 years?
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The accrual of simple interest can be found in two steps. First, multiply the principal amount by the interest rate. Second, multiply that result by the number of years during which interest will accrue.
The question asks for the total amount that the business will owe the bank, so we must add the interest accrued to the principal amount.
The accrual of simple interest can be found in two steps. First, multiply the principal amount by the interest rate. Second, multiply that result by the number of years during which interest will accrue.
The question asks for the total amount that the business will owe the bank, so we must add the interest accrued to the principal amount.
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How much interest will be accumulated in a simple interest investment if 
is invested for 
years at 
interest rate?
How much interest will be accumulated in a simple interest investment if
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Simple interest equation:
Simple interest equation:
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Bob lends $500 to his friend, who agrees to pay it back one month later with 5% simple interest. How much will Bob's friend owe him at the end of the month?
Bob lends $500 to his friend, who agrees to pay it back one month later with 5% simple interest. How much will Bob's friend owe him at the end of the month?
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At the end of one month, Bob's friend will owe him the $500, plus the 5% simple interest he agreed to pay. The total amount he owes Bob, then, will be $500 plus 5% of $500. This gives us:
At the end of one month, Bob's friend will owe him the $500, plus the 5% simple interest he agreed to pay. The total amount he owes Bob, then, will be $500 plus 5% of $500. This gives us:
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We deposit 
today in an account paying 
annual simple interest, how much do we have in the account at the end of the 
year, provided we make no other deposit?
We deposit
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This is a simple interest problem, therefore, the amount of interests received is given by the formula: 
, where 
is the principal, 
is the number of periods and 
is the rate over that period. In this problem 
is 140,000, 
is 10 and 
is 10% or 0.1. Therefore we get 
or 140,000. We add the interest received to the principal, and we get the final answer of 
.
This is a simple interest problem, therefore, the amount of interests received is given by the formula:
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We deposit today 
in an account paying 
simple interest every 
months. Assuming we make no other deposits, how much interests will we receive after 
years?
We deposit today
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By applying the formula for simple interest rates, 
, where 
is the principal, 
the rate for the given period and 
is the number of periods we can easily get the amount of interests received. Our 
is 15, because the rate is given for 6 months. 7 years is equivalent to 14 times 6 months, to that we add the last half year and we get 15 periods. Therefore the amount 
of interest received is : 
or 
.
By applying the formula for simple interest rates,
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If 
is invested at 
simple annual interest rate over 
months, what it is the amount of interest earned over that period?
If
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Here, we cannot apply the rate as is, since it is given for a year. We just have to divide the rate by the number of months in a year, since we are looking for a monthly rate. Therefore, the applicable rate is 
, now we can apply the 
formula and we get: 
or 
.
Here, we cannot apply the rate as is, since it is given for a year. We just have to divide the rate by the number of months in a year, since we are looking for a monthly rate. Therefore, the applicable rate is
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A local credit union offers short-term loans at an annual interest rate of 
. If Jasmine takes out a 
loan for 
months, how much will she pay in interest?
A local credit union offers short-term loans at an annual interest rate of
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Here we need our simple interest formula. There is no compounding, so all we need is:
= Dollar amount of interest
= Amount borrowed/invested
= Annual interest rate
= Number of years borrowed/loaned
Plug in what we know and solve for 
:
So, Jasmine pays 
in interest.
Here we need our simple interest formula. There is no compounding, so all we need is:
Plug in what we know and solve for
So, Jasmine pays
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How much interest would an investment yield if the principal of is invested for years at a simple interest?
How much interest would an investment yield if the principal of
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Jessica deposits $5,000 in a savings account that collects 6% simple interest. How much money will she have accumulated after 5 years?
Jessica deposits $5,000 in a savings account that collects 6% simple interest. How much money will she have accumulated after 5 years?
Tap to reveal answer
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