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Simple interest is a method of calculating interest on a loan or investment. It is calculated as a percentage of the principal amount, which is the original amount, borrowed or invested. The formula for calculating simple interest is:

Simple Interest = (Principal * Rate * Time)

Where:

Principal is the original amount borrowed or invested

Rate is the interest rate expressed as a percentage

Time is the duration of the loan or investment in years

Let's look into Solved examples on Simple interest......

Ariel 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 R x T

= 8,000 x 0.09 x 1

= 720

Annual Interest to be paid = $720

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 & Rate of Interest = 2% =0.02

I = PRT

I = 1000 x 0.02 x 4

I = $800

Interest earned for the investment = $ 800

Ryan bought $15,000 from a bank to buy a car at simple interest of 10%

He repaid $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, Interest paid =
9,000. And T is time to be found.

T = I/(PR)

= 9000/(15,000 x 0.10)

T = 6 years.

The loan was given for 6 years.

How much time will the simple interest on $3,500 at the rate of 9% will be the same as simple interest on $4,000 at the rate of 10.5% per annum for 4 years?

Solution : Simple interest on 4,000 at rate10.5%

I = PxTxR

I= 4000 x 4 x 0.105

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

Time = t = ------------

P x R

1680

Time = t = ------------

3500 x 0.09

1680

Time = t = ------------

315

Time = t = 5.33 years

John borrows $10,000 from a bank at a simple interest rate of 5% per annum for a period of 3 years. What is the total amount of interest he has to pay?

Solution: Principal = $10,000, Rate = 5%= 0.05,

Time = 3 years

I = (10,000 * 0.05 * 3)

I = $1,500

Therefore, John has to pay a total interest of $1,500.

Samantha invests $5,000 in a fixed deposit at a bank for a period of 2 years at a simple interest rate of 3% per annum. What is the total amount of interest she will earn?

Solution: Principal = $5,000, Rate = 3% = 0.03, Time = 2 years

I = prt

I = (5,000 * 0.03 * 2)

I = $300

Therefore, Samantha will earn a total interest of $300.

Mark borrows $8,000 from a friend at a simple interest rate of 2.5% per month for a period of 6 months. What is the total amount of interest he has to pay?

Solution: Principal = $8,000, Rate = 2.5%= 0.025, Time = 6 months

First, we need to convert the monthly interest rate to an annual rate:

2.5% per month = 2.5 * 12 = 30% per annum

I= prt

I = (8,000 * 0.30 * 6)

I = $14,400

Therefore, Mark has to pay a total interest of $14,400.

If you borrow $5,000 at a simple interest rate of 6% per annum for 2 years, how much interest will you pay?

Solution:

I= prt

I = (5,000 x 0.06 x 2)

I = $600

If you invest $10,000 at a simple interest rate of 3% per annum for 5 years, how much interest will you earn?

Solution:

I = prt

I = (10,000 x 0.03 x 5)

I = $1,500

If you borrow $2,500 at a simple interest rate of 8% per annum for 1 year, how much interest will you pay?

Solution:

I = prt

I = (2,500 x 0.08 x 1)

I = $200

If you invest $7,500 at a simple interest rate of 2.5% per annum for 3 years, how much interest will you earn?

Solution: I = prt

I = (7,500 x 0.025 x 3)

I = $562.50

If you borrow $15,000 at a simple interest rate of 4.5% per annum for 4 years, how much interest will you pay?

Solution:I = prt

I = (15,000 x 0.045 x 4)

I = $2,700

If you invest $20,000 at a simple interest rate of 2% per annum for 7 years, how much interest will you earn?

Solution: Simple Interest = prt

I =(20,000 x 0.02 x 7)

I = $2,800

If you invest $12,500 at a simple interest rate of 1.8% per annum for 2 years, how much interest will you earn?

Solution: Simple Interest =prt

I =(12,500 x 0.018 x 2)

I = $450

If you borrow $8,000 at a simple interest rate of 7% per annum for 3 years, how much interest will you pay?

Solution: Simple Interest = prt

I=(8,000 x 0.07 x 3)

I= $1,680

If you invest $30,000 at a simple interest rate of 4% per annum for 5 years, how much interest will you earn?

Solution: Simple Interest = prt

I = (30,000 x0.04 x 5)

I = $6,000

To know more about Simple Interest, Compound Interest and its applications, please go through the below links...

Finding rate when Principal and time are given

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