Simple interest formula and examples
Jun 30, · Calculating simple interest or the amount of principal, the rate, or the time of a loan can seem confusing, but it's really not that hard. Here are examples of how to use the simple interest formula to find one value as long as you know the others. The larger the interest rate and the longer the time period, the more expensive the loan. Also note that you could calculate this by first finding the interest, I = Prt = ( (8)) = $, and adding it to the principal of $ The final answer is the same using either method.
Simple interest is when the interest on a loan or investment is calculated only on the amount initially invested or loaned. This is different from compound interest, where interest is calculated on on the initial amount and on any interest earned. As you will see in the examples below, the simple interest formula can be used to calculate the interest earned, the total amount, and other values depending on the problem. The formula for this how to care for mallard duck eggs. Find the interest earned.
In this example, the time given was in years, just as in the formula. But what if you are only given a number of months? How much interest is earned on this investment?
Before we can apply the formula, we will need to write the time of 4 months in terms of years. Since there are 12 months in a year:. So, always make sure to gind that the time is in years before applying the formula. The time must be in years to apply the simple interest formula. If you are given months, use a fraction to represent it as years. ,ath type of problem you might run into when working with simple interest is finding the hw amount owed or the total value slmple an investment after a given amount of time.
This is known as the future value, and can be calculated in a couple of different intereet. One rqte to calculate the future value would be to just go the interest and then add it to the principal. The quicker method however, is to use the following formula. What is the total amount the business will repay if the loan is for 8 years?
This may seem high, but remember that in the context of a loan, interest is really just a fee for borrowing the money. The larger the interest rate and the longer the time period, the more expensive the loan. The final how to use hand blender chopper is the same using either method.
Now that you have studied the simple interest formula, you can learn the more advanced idea of compound interest. Most savings accounts, credit cards, and loans are based on compound instead of simple interest. You can review this idea here:. We are always posting new free lessons and adding more study guides, calculator guides, and problem packs. Sign up to get occasional emails once every couple or three weeks letting you know what's new!
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Using the Simple Interest Formula to Calculate Interest Earned
Choose whether you want to calculate simple interest (I), principal (P), interest rate (r) or duration/period (t). Fill in the blue boxes with the required numbers. Click on the 'Calculate' button to calculate. The sample answer and solution will be shown below the calculator. Simple Interest Formulas and Calculations: This calculator for simple interest-only finds I, the simple interest where P is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods. Where r is in decimal form; r=R/ r and t are in the same units of time. Calculate Interest, solve for I. To find the interest you can use this formula. Interest = Principal ? Rate of interest ? Time. The principal is the amount of money you borrow or invest. The rate .
Simple interest is calculated only on the initial amount principal that you invested. This means that you will not earn an interest on your interest. This calculator can be used to solve various types of simple interest problems. The calculator will print easy to understand step-by-step explanation. Welcome to MathPortal.
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The calculator will generate an explanation on how the calculation process is done. Here you can select a value you want to find. Select variable you want to find and enter known variables. Input known variables:.
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