Simple Interest
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Lesson Summary:
In this lesson on simple interest, Professor Perez explains the formula I = PRT (where I is the interest, P is the principal, R is the interest rate, and T is the time in years) and walks through several word problems. He also covers how to convert days to years when calculating interest, and emphasizes the importance of being careful with the given time frame. By the end of the lesson, students will have a solid understanding of how to calculate interest on simple loans or investments.
Lesson Description:
Word problems about finding interest on money that was invested.
Created by and copyright of Larry Perez. Funded by the state of California through Saddleback College. More information on videos, resources, and lessons at Algebra2Go.
Questions answered by this video:
- How do you calculate simple interest?
- What is the simple interest formula?
- What is the formula I = P*R*T used to calculate?
- If a student takes out an emergency loan for $600 to pay for school supplies, and the interest rate is 6% annually, how much interest does the student have to pay after 6 months?
- What is the interest charged if the principal is $600, the rate is 0.06, and the time is 0.5 years?
- If an investor deposits $2000.00 into a savings account and the account pays 7% interest annually, what is the amount in the account after two years?
- What is the amount in an account if the principal is $2000, the rate is 0.07, and the time is 2 years?
- If a student needs a 90 day loan for $750 and the annual interest rate is 18%, how much must the student pay the lender after 90 days?
- How much must be paid on a loan if the principal is $750, the rate is 0.18, and the time is 0.25 years?
- How can you figure out how much interest you will have to pay on a loan that you take out?
- How can you calculate how much interest you will earn in a bank account?
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Staff Review
This video goes through several example problems of finding interest gained from money invested in a bank account as well as interest to be paid on a loan. These are very useful skills to have for financial reasons, and this video can be very useful for calculating interest on simple problems.
