3.4 Calculating Principal, Rate and Time
If any three of the four variables in the relationship () are given, you should be able to calculate the value of the unknown variable. Starting with the basic interest equation:
You can solve for P or r or t as follows:
Since r is the rate in percent per year, the answer for t will be in years (or part thereof):
Since is the time in years, the answer for will be the annual rate of interest in decimal form.
Knowledge Check 3.1
Now try these exercises.
- What is the interest charged to borrow $3,000 for 180 days at 6% simple interest?
- If $55 interest was charged for a loan at 5.5% simple interest for 125 days, how much was borrowed?
- How many days will it take a savings deposit of $900 to earn at least $65 interest, if the simple interest rate is 7.5%?
- What rate of simple interest is used when a deposit of $975 earns $36.73 interest in 220 days?
Your Own Notes
- Are there any notes you want to take from this section? Is there anything you’d like to copy and paste below?
- These notes are for you only (they will not be stored anywhere)
- Make sure to download them at the end to use as a reference
