Solved examples on Simple Interest

In this section I have solved examples on simple interest. By referring these you can solve your questions.

Examples :

1) Dick takes a loan of $8,000 to buy a used truck at the rate of 9 % simple Interest.Calculate the annual interest to be paid for the loan amount.

Solution:
From the details given in the problem Principle = P = $8,000 and R = 9% or 0.09 expressed as a decimal.

As the annual Interest is to be calculated, the time period T =1.

Plugging these values in the simple Interest formula,

I = P x T x R

= 8,000 x 1 x 0.09

= 720.00

Annual Interest to be paid = $720

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2) Steve invested $ 10,000 in a savings bank account that earned 2% simple interest. Find the interest earned if the amount was kept in the bank for 4 years.

Solution:
Principle P = $ 10,000 Time Period T =4 years and Rate of Interest = 2% = 0.02

Plugging these values in the simple Interest formula,
I = PX T X R

= 10,000 X 4 x 0.02

= $ 800

Interest earned for the investment = $ 800

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3) Ryan bought $ 15,000 from a bank to buy a car at 10% simple Interest. If he paid $ 9,000 as interest while clearing the loan, find the time for which the loan was given.

Solution : Principle = $ 15,000 Rate of Interest R = 10% = 0.10 and the Interest paid = I = $ 9,000. And T is to be found.

T = I/(PR)

= 9000/(15,000 x 0.10)

= 6 years.

The loan was given for 6 years.

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Solved examples on Simple Interest
4) In how much time will the simple interest on $3,500 at the rate of 9% p.a be the same as simple interest on $4,000 at 10.5% p.a for 4 years?

Solution :
S.I on $4,000 at rate 10.5% = 10.5/100 = 0.105 for 4 years

S.I = ( P x R x T) /100

= 4000 x 0.105 x 4

S.I = $ 1,680

The interest of $1,680 is the same as that on $3,500 at 9% p.a for suppose 't' years.

          S.I x 100
Time = t = ------------
P x R

1680 x 100
Time = t = ------------
3500 x 9

168,000
Time = t = ------------
31,500

Time = t = 5.33years.

Simple Interest (S.I)

Finding rate when Principal and time are given
Finding time when Principal and rate are given
Solved examples on Simple Interest
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