Simple interest

  In this lesson we're going to learn how find the simple interest. When you're finding a simple interest, you need to know the amount you're borrowing, the interest rate and the time you have to pay. The use of simple interest is when you invest money in the bank savings account or when you  borrowed money from the bank.

 When you're finding an interest, there's a formula for finding an interest.
                                I = PRT

I = Interest
P = Principal
R = Rate
T = Years

1. Our first example is "Miller borrowed $600 from bank. How much does he have to pay the interest if he has to pay for 5 years and the rate is 15%?"

Now we use the formula: 600 x 15/100 x 5
                                      = 600 x 15/100 x 5
                                      = $450
 Therefore the answer is $450.

 2. Second example is " Sullivan deposits $3000 in his bank savings account which pays interest at 34%.
 How much interest will he get after 7 months?"

In this case, 7 month is 7/12, reason we're doing like this is we can't just times 1 year, we have to be very accurate so we put 7 month on the numerator and 12 months equals to 1 year so we put 12 on the denominator.

 i.e 3000 x 34% (34/100) x 7/12
 = $595


 * When the amount of time is in months like in example 2, put the number of the months on numerator which is given in the question and put 12 months in denominator. Just letting you know if you're changing to the other unit, it needs to be equal.