Simple Interest

Formula
I = PRT
 I = PRT
• I = interest earned
• P = Principle amount invested or
borrowed.
• R = Interest Rate usually given as a
percent (must changed to decimal before
plugging it into formula)
• T = Time (must be measured in years) or
converted to years by dividing by 12 months
 Converting
• Change % to decimal • Answers

1) 12% 1) .12 Move 2 places

2) 5% 2) .05 to left & drop % sign
3) 2½% 3) .025
4) 8.5% 4) .085

• Change from decimal to %

5) .098 5) 9.8%
6) .455 6) 45.5%

Move 2 places
to right & add % sign
 I = PRT
Solve for one of variables:
• Solving for I • Solving for other
• Plug in numbers variables
for P, R, & T. • Plug in what you
• Then multiply know.
• Multiply the
numbers that are
on same side then
divide by that
answer.
In order to buy a new gadget, Maria decided to barrow
P5,000 at an annual simple interest rate of 5%. After
two years, how much interest does she need to pay?

• I = PRT • Interest paid by bank

• I= (5,000)(.05)(2) is unknown
• I=P500 • Principal (invested)
• Rate changed to
decimal
• Time is 2 years
• Multiply
Find the amount of simple interest for the following:

1. P2, 500 at 3.5% annual simple interest rate for

2 years
2. P5, 300 at 2% annual simple interest rate for
3.5 years
3. P10, 000 at 4% annual simple interest rate for 6
months
Jose deposited P1, 000 today in a
bank providing 3% simple interest
per year. He wants to have
savings worth P1, 450 in the
future. If he will not withdraw any
amount, how long must he wait?
 It will take 15 years for
Jose’s deposit to be worth
P1, 450.
Find the present value of the following
at the given annual simple interest
rate:

1.P1, 000 after 2 years at 3% interest

2. P2, 500 after 5 years at 1.5% interest
3.P10, 000 after 10 years at 5% interest
 Solve the following problems.
1. Irene invested P25,000.00 at 16% simple
interest for 6 years.
A. How much interest will be earned?
B. What is the maturity value of the investment
at the end of 6 years.
2. Jun is investing an amount at 15% simple
interest for 3 years. If he intends to have
P48,200.00 at the end of the term, what must
be his principal?
3. Ana borrows P20,000.00 for her uncle and
agrees to pay him P22,000.00 in 15 months.
What interest rate was she paying?
Principal (P) Rate of Time (t) Maturity
Interest ® Value (A)

1. P35,600 6% 9 mo.

1. P140,250 10% 15 mo.

1. P75,800 8½% 2 yr.

1. P340,200 11% 6 yr.

1. P1,400,500 9% 10 yr
2. A savings account is set up so that the simple interest earned on the
investment is moved into a separate account at the end of each year. If
an investment of Php7,000 is invested at 7.5%, what is the total simple
interest accumulated in the checking account after 3 years.

• I = PRT • Interest paid by bank

• I= (7,000)(.075)(3) is unknown
• I=Php1575 • Principle (invested)
• Rate changed to
decimal
• Time is 3 years
• Multiply
3. When invested at an annual interest rate of 6% an account
earned Php180.00 of simple interest in one year. How much
money was originally invested in account?

• I = PRT • Interest paid by

• 180= P (.06) (1) bank
• 180 = .06P • Principle (invested)
.06 .06 is unknown
3,000 = P • Rate changed to
decimal
• Time is 1 year
• Multiply
• Divide
4. When invested at an annual interest rate of 7% an account
earned Php581.00 of simple interest in one year. How much
money was originally invested in account?

• I = PRT • Interest paid by

• 581= P (.07) (1) bank
• 581 = .07P • Principle (invested)
.07 .07 is unknown
Php8,300 =P • Rate changed to
decimal
• Time is 1 year
• Multiply
• Divide
5. A savings account is set up so that the simple interest earned on
the investment is moved into a separate account at the end of each
year. If an investment of Php7,000 accumulate Php910 of interest in
the account after 2 years, what was the annual simple interest rate
on the savings account?

• I = PRT • Interest paid by bank

• 910=(7,000)(R)(2) • Principle (invested)
• 910 = (7,000)(2)R • Rate is unknown
• 910 = 14,000 R • Time is 2 years
14,000 14,000 • Regroup & Multiply
0.065 = R • Divide
6.5% = R • Change to %
6. A savings account is set up so that the simple interest earned on
the investment is moved into a separate account at the end of each
year. If an investment of Php2,000 accumulate Php360 of interest in
the account after 4 years, what was the annual simple interest rate
on the savings account?

• I = PRT • Interest paid by bank

• 360=(2,000)(R)(4) • Principle (invested)
• 360 = (2,000)(4)R • Rate is unknown
• 360 = 8,000 R • Time is 4 years
8,000 8,000 • Regroup & Multiply
0.045 = R • Divide
4.5% = R • Change to %
 7. Sylvia bought a 6-month Php1900 certificate of deposit. At the
end of 6 months, she received a Php209 simple interest. What rate of
interest did the certificate pay?

• I=PRT • Interest paid by

209= 1900(R) (6/12) bank
209=(1900)(6/12)R • Principle (invested)
209=950R • Rate is unknown
950 950 • Time is 6 months
0.22 = R (divide by 12)
22% = R • Regroup & Multiply
• Divide
• Change to %
8. An investment earns 4.5% simple interest in one year. If
the money is withdrawn before the year is up, the interest is
prorated so that a proportional amount of the interest is paid
out. If Php2400 is invested, what is the total amount that
can be withdrawn when the account is closed out after 2
months?
•I=PRT • Interest paid by
bank - Unknown
•I= (2400)(.045)(2/12)
• Principle (invested)
I=Php18
• Rate is .045
• Time is 2 months
Php18 + Php2400 = Php2418
(divide by 12)
• Multiply
Php2418 will be withdrawn
• Now, since the money
is being withdrawn,
add the interest to the
principal.