SIMPLE INTEREST

Practice Problems with Complete Solutions

Covers: Finding I · P · r · t · A · Special Cases with Two Missing Variables

■ PART 1 — Find the Interest (I)

Ana deposited ■8,000 in a savings account at 5% simple interest for 3 years. How much interest
will she earn?

Find: Interest (I)

1
Formula: I = P × r × t

Answer: I = 8,000 × 0.05 × 3 = ■1,200.00

Carlo borrowed ■15,000 from a lending company at 8% simple interest for 18 months. How much
interest will he pay?

Find: Interest (I)

2
Formula: I = P × r × t | Convert: 18 months = 18/12 = 1.5 years

Answer: I = 15,000 × 0.08 × 1.5 = ■1,800.00

Maria invested ■50,000 at 6.5% simple interest per year for 9 months. Find the interest earned.

Find: Interest (I)

3 Formula: I = P × r × t | Convert: 9 months = 9/12 = 0.75 years

Answer: I = 50,000 × 0.065 × 0.75 = ■2,437.50

■ PART 2 — Find the Principal (P)

Ben paid ■9,600 in interest on a loan at 12% simple interest for 4 years. How much was his
original loan?

Find: Principal (P)

4
Formula: P = I ÷ (r × t)

Answer: P = 9,600 ÷ (0.12 × 4) = 9,600 ÷ 0.48 = ■20,000.00

 A bank charged ■3,500 interest at 7% simple interest for 2.5 years. What was the original amount
borrowed?

Find: Principal (P)

5
Formula: P = I ÷ (r × t)

Answer: P = 3,500 ÷ (0.07 × 2.5) = 3,500 ÷ 0.175 = ■20,000.00

Liza earned ■4,800 interest from an investment at 8% per year for 36 months. Find the principal
she invested.

Find: Principal (P)

6
Formula: P = I ÷ (r × t) | Convert: 36 months = 3 years

Answer: P = 4,800 ÷ (0.08 × 3) = 4,800 ÷ 0.24 = ■20,000.00

■ PART 3 — Find the Rate (r)

Rico invested ■25,000 in a fund and earned ■6,000 interest after 4 years. At what annual rate
was his investment?

Find: Rate (r)

7
Formula: r = I ÷ (P × t) → then multiply by 100 for %

Answer: r = 6,000 ÷ (25,000 × 4) = 6,000 ÷ 100,000 = 0.06 = 6%

Nena borrowed ■10,000 and paid back ■12,500 after 2.5 years. At what simple interest rate did
she borrow?

Find: Rate (r)

8
Formula: First find I: I = A − P = 12,500 − 10,000 = 2,500 | then r = I ÷ (P × t)

Answer: r = 2,500 ÷ (10,000 × 2.5) = 2,500 ÷ 25,000 = 0.10 = 10%

A ■30,000 loan generated ■5,400 interest in 18 months. What was the annual simple interest
rate?

Find: Rate (r)

9
Formula: r = I ÷ (P × t) | Convert: 18 months = 1.5 years

Answer: r = 5,400 ÷ (30,000 × 1.5) = 5,400 ÷ 45,000 = 0.12 = 12%

 ■ PART 4 — Find the Time (t)

Marco borrowed ■20,000 at 10% simple interest. He paid ■6,000 in interest at the end of the
loan. How long was the loan?

Find: Time (t)

10
Formula: t = I ÷ (P × r)

Answer: t = 6,000 ÷ (20,000 × 0.10) = 6,000 ÷ 2,000 = 3 years

Rosa invested ■40,000 at 8% per year. How long will it take for her to earn ■9,600 in interest?

Find: Time (t)

11 Formula: t = I ÷ (P × r)

Answer: t = 9,600 ÷ (40,000 × 0.08) = 9,600 ÷ 3,200 = 3 years

A loan of ■12,000 at 15% simple interest accumulated ■2,700 in interest. How long was the
money borrowed?

Find: Time (t)

12
Formula: t = I ÷ (P × r)

Answer: t = 2,700 ÷ (12,000 × 0.15) = 2,700 ÷ 1,800 = 1.5 years (18 months)
 ■ PART 5 — Find the Future Value / Total Amount (A)

Diana deposited ■20,000 in a bank at 7.5% simple interest for 4 years. How much will she receive
in total at the end?

Find: Future Value (A)

13
Formula: A = P + I where I = P × r × t

Answer: I = 20,000 × 0.075 × 4 = 6,000 | A = 20,000 + 6,000 = ■26,000.00

A ■100,000 investment earns 9% simple interest per year. What is the total amount after 5 years?

Find: Future Value (A)

14 Formula: A = P(1 + rt)

Answer: A = 100,000 × (1 + 0.09 × 5) = 100,000 × 1.45 = ■145,000.00

Joel borrowed ■35,000 at 11% simple interest for 30 months. How much will he pay in total?

Find: Future Value (A)

15 Formula: A = P(1 + rt) | Convert: 30 months = 2.5 years

Answer: A = 35,000 × (1 + 0.11 × 2.5) = 35,000 × 1.275 = ■44,625.00

■ PART 6 — Find Principal Given Total Amount (A)

How much do you need to invest today at 8% simple interest per year to have a total of ■67,200
after 3 years?

Find: Principal (P)

16
Formula: P = A ÷ (1 + rt)

Answer: P = 67,200 ÷ (1 + 0.08 × 3) = 67,200 ÷ 1.24 = ■54,193.55

A lender expects to receive ■84,000 total from a 2-year loan at 9% simple interest. What was the
original loan?

Find: Principal (P)

17
Formula: P = A ÷ (1 + rt)

Answer: P = 84,000 ÷ (1 + 0.09 × 2) = 84,000 ÷ 1.18 = ■71,186.44

 At 6% simple interest for 5 years, an investor ends up with ■130,000. How much did she originally
invest?

Find: Principal (P)

18
Formula: P = A ÷ (1 + rt)

Answer: P = 130,000 ÷ (1 + 0.06 × 5) = 130,000 ÷ 1.30 = ■100,000.00

■■ PART 7 — Special Cases: Two Variables Missing

■ In these problems, two variables are missing. Use A − P = I as a bridge to solve step by step.

Missing: I and r June paid a total of ■95,000 for a loan she borrowed for 4 years. The original loan
was ■75,000. At what rate was she charged?

Find: Interest (I) and Rate (r)

19 Formula: Step 1: I = A − P | Step 2: r = I ÷ (P × t)

Answer: Step 1: I = 95,000 − 75,000 = ■20,000 Step 2: r = 20,000 ÷ (75,000 × 4) = 20,000 ÷

300,000 = 0.0667 ≈ 6.67%

Missing: I and t Ricky borrowed ■18,000 and ended up paying ■22,500 in total. The bank
charged 10% simple interest. How long did he borrow the money?

Find: Interest (I) and Time (t)

20 Formula: Step 1: I = A − P | Step 2: t = I ÷ (P × r)

Answer: Step 1: I = 22,500 − 18,000 = ■4,500 Step 2: t = 4,500 ÷ (18,000 × 0.10) = 4,500 ÷
1,800 = 2.5 years

Missing: I and P A bank charged 12% simple interest for 3 years. The borrower paid a total of
■140,000. What was the original loan and how much was the interest?

Find: Principal (P) and Interest (I)

21 Formula: Step 1: P = A ÷ (1 + rt) | Step 2: I = A − P

Answer: Step 1: P = 140,000 ÷ (1 + 0.12 × 3) = 140,000 ÷ 1.36 = ■102,941.18 Step 2: I =

140,000 − 102,941.18 = ■37,058.82
 Missing: I and r (with monthly time) Susan borrowed money for 24 months and paid back ■55,000
in total. Her original loan was ■44,000. What was the annual interest rate?

Find: Interest (I) and Rate (r)

22 Formula: Step 1: I = A − P | Convert: 24 months = 2 years | Step 2: r = I ÷ (P × t)

Answer: Step 1: I = 55,000 − 44,000 = ■11,000 Step 2: r = 11,000 ÷ (44,000 × 2) = 11,000 ÷

88,000 = 0.125 = 12.5%

Simple Interest Practice Problems • Made for Lucia • All formulas follow I = Prt