2. I=PxRxT
Where:
I = the Interest Money created in dollars
P = the “Principal” starting amount of money
R = the Interest Rate per year (in decimal form)
T = the Time the money is Invested,
or Borrowed, in Years
3. Interest can be calculated to be paid as
Half-Yearly, Quarterly, Monthly, or Daily.
"T" needs to be entered as a fraction of a year, into
I = PRT, because the Interest Rate is in units of years.
Half Yearly : T = 1/2
Quarterly : T = 1/4
Monthly : T = 1/12
Daily : T = 1/365
4. Roxanna borrows $6000 to buy a car at 18.5% pa
Simple Interest, to be paid back over 5 years.
I = PRT
I = $6 000 x 0.185 x 5
I = $5 550
Image Purchased by Passy World from Dreamstime.com
5. Roxanna borrows $6000 to buy a car at 18.5% pa
Simple Interest, to be paid back over 5 years.
The Total Amount Roxanna has to repay is the
original $6000, plus all of the $5550 Interest.
Total Amount = Principal + Interest
= $6000 + $5550
= $11 550
6. “How long does Keith need to invest $4000, at
3.33% pa, to earn $800 of Interest money?"
I = PRT rearranges to T=I (P x R)
T = 800 (4000 x 0.0333)
T = 6.006
T = 6 years
Image Source: http://www.thelocalloancompany.com.au
7. “What Interest Rate do we require, to get $10 000
of interest money generated from investing
$20 000 for 3 years ?"
I = PRT rearranges to R=I (PxT)
R = 10 000 (20 000 x 3)
R = 0.166666
R = 16.7%
Image Source: http://sklepcukrzyka.pl
8. “Tayla borrowed money on 22% Simple Interest for 1 year to
buy some expensive Christmas Presents.
When she paid back the Loan a year later, $440 Interest was
charged.
What was the original Principal Amount she borrowed?"
I = PRT rearranges to P=I (R x T)
P = 440 (0.22 x 1)
P = $2000
Image Source: http://static.guim.co.uk
