Lesson Simple interest percentage problems

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Simple interest percentage problems

Problem 1

Jane invests $2,000 in a saving account. The account pays an annual simple interest rate
of 5.75% at the end of each year. How much will be in her account at the end of 10 years?

Solution

A general formula for a simple interest account earning r percents per year is


    FV = A*(1 + r*t)


where A is the original deposit, FV is the future value, r is the annual rate expressed as a decimal, t is the time (in years).


In our case,  A = 2000 dollars; r = 0.0575; t = 10 years.


The future value of the account after 10 years is 


    2000 + 0.0575*2000*10 = 3150.      ANSWER

Problem 2

Nate borrows $300 to buy a smartphone. He is charged 5% simple interest per year.
How much interest, in dollars, will Nate pay after 2 years?

Solution

The interest after 2 years will be  0.05*300*2 = 30 dollars.     ANSWER

Problem 3

Money is borrowed at 11% simple interest. After one year, $1292.04 pays off the loan.
How much was originally borrowed?

Solution

Let x be the originally borrowed amount.


Then you have this equation for the amount after 1 year


    x + 0.11x = 1292.04  dollars,   or


    x*(1 + 0.11) = 1292.04 dollars


    1.11x        = 1292.04


       x         =  = 1164.


ANSWER.  1164 dollars.

My other lessons on percentage in this site are
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    - Percentage word problems (Type 2 problems, Finding the Rate)
    - Percentage word problems (Type 3 problems, Finding the Base)
    - Simple percentage problems
    - More complicated percentage problems
    - Advanced problems on percentage
    - Percentage problems on chains of discounts
    - Problems on percentage that lead to unexpected results
    - Compounded interest percentage problems
    - Buying price, selling price and profit percentage problems
    - Business-related entertainment problem on percentage
    - OVERVIEW of lessons on percentage problems

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