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Find the rate if a principal of earned interest in years.
4.5%
Find the rate if a principal of earned interest in years.
6.5%
Applications with simple interest usually involve either investing money or borrowing money. To solve these applications, we continue to use the same strategy for applications that we have used earlier in this chapter. The only difference is that in place of translating to get an equation, we can use the simple interest formula.
We will start by solving a simple interest application to find the interest.
Nathaly deposited in her bank account where it will earn interest. How much interest will Nathaly earn in years?
We are asked to find the Interest,
Organize the given information in a list.
| Write the formula. | |
| Substitute the given information. | |
| Simplify. | |
| Check your answer. Is $2,500 a reasonable interest on $12,500 over 5 years? | |
| At 4% interest per year, in 5 years the interest would be 20% of the principal. Is 20% of $12,500 equal to $2,500? Yes. | |
| Write a complete sentence that answers the question. | The interest is $2,500. |
Areli invested a principal of in her bank account with interest rate How much interest did she earn in years?
$142.50
Susana invested a principal of in her bank account with interest rate How much interest did she earn in years?
$7,020
There may be times when you know the amount of interest earned on a given principal over a certain length of time, but you don't know the rate. For instance, this might happen when family members lend or borrow money among themselves instead of dealing with a bank. In the next example, we'll show how to solve for the rate.
Loren lent his brother to help him buy a car. In his brother paid him back the plus in interest. What was the rate of interest?
We are asked to find the rate of interest,
Organize the given information.
| Write the formula. | |
| Substitute the given information. | |
| Multiply. | |
| Divide. | |
| Simplify. | |
| Change to percent form. | |
| Check your answer. Is 5.5% a reasonable interest rate to pay your brother? | |
| Write a complete sentence that answers the question. | The rate of interest was 5.5%. |
Jim lent his sister to help her buy a house. In years, she paid him the plus interest. What was the rate of interest?
6%
Hang borrowed from her parents to pay her tuition. In years, she paid them interest in addition to the she borrowed. What was the rate of interest?
4%
There may be times when you take a loan for a large purchase and the amount of the principal is not clear. This might happen, for instance, in making a car purchase when the dealer adds the cost of a warranty to the price of the car. In the next example, we will solve a simple interest application for the principal.
Eduardo noticed that his new car loan papers stated that with an interest rate of he would pay in interest over years. How much did he borrow to pay for his car?
We are asked to find the principal,
Organize the given information.
| Write the formula. | |
| Substitute the given information. | |
| Multiply. | |
| Divide. | |
| Simplify. | |
| Check your answer. Is $17,590 a reasonable amount to borrow to buy a car? | |
| Write a complete sentence that answers the question. | The amount borrowed was $17,590. |
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