3.4 Calculating Principal, Rate and Time
If any three of the four variables in the relationship ([latex]I = Prt[/latex]) are given, you should be able to calculate the value of the unknown variable. Starting with the basic interest equation:
[latex]I = Prt[/latex]
You can solve for P or r or t as follows:
[latex]P=\frac{I}{rt}[/latex]
[latex]t=\frac{I}{Pr}[/latex]
Since r is the rate in percent per year, the answer for t will be in years (or part thereof):
[latex]r=\frac{I}{Pt}\times100%[/latex]
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?
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