The only difference is that in place of translating to get an equation, we can use the simple interest formula. To the nearest dollar, how much will Lily need to invest in the account now? The American Heritage® Science Dictionary These example sentences are selected automatically from various online news sources to reflect current usage of the word 'simple interest.' [latex]I=$900\left(0.021\right)\left(\Large\frac{10}{12}\normalsize\right)[/latex]. In the next example, we’ll show how to solve for the rate. See more ideas about Kindergarten reading, Phonics reading, Kindergarten reading worksheets. [latex]6,596.25=P\left(0.075\right)\left(5\right)[/latex], [latex]\Large\frac{6,596.25}{0.375}\normalsize=\Large\frac{0.375P}{0.375}[/latex]. The example video that follows shows how to determine the annual simple interest rate. Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free! For instance, this might happen when family members lend or borrow money among themselves instead of dealing with a bank. She believes the account will earn 6% compounded annually. Substitute the given information, converting 10 months to [latex]\Large\frac{10}{12}[/latex] of a year. Organize the given information. © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Is [latex]5.5\%[/latex] a reasonable interest rate to pay your brother? Solution How much interest did this investment earn? Eduardo noticed that his new car loan papers stated that with an interest rate of [latex]\text{7.5%}[/latex], he would pay [latex]\text{\$6,596.25}[/latex] in interest over [latex]5[/latex] years. Identify the information given in the problem. Is [latex]20\text{%}[/latex] of [latex]\text{\$12,500}[/latex] equal to [latex]\text{\$2,500}[/latex]? Sometimes you will be asked for the final total amount in an account after interest is added. [latex]660\stackrel{?}{=}\left(3,000\right)\left(0.055\right)\left(4\right)[/latex]. Yes. What was the rate of interest? [latex]\begin{array}{c}A\left(t\right)\hfill & =P\left(1+r\right)^{t}\hfill & \text{Use the compound interest formula}. Check your answer. Compound interest can be calculated using the formula. Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009, 2012. Applications with simple interest usually involve either investing money or borrowing money. Identify the information given in the problem. Accessed 29 Oct. 2020. We want to find the initial investment, [latex]P[/latex], needed so that the value of the account will be worth [latex]$40,000[/latex] in [latex]18[/latex] years. Organize the given information. So the units of time must be in years. Simple interest definition is - interest paid or computed on the original principal only of a loan or on the amount of an account. \\ \text{ }\hfill & \approx 4031.75\hfill & \text{Round to two decimal places}.\end{array}[/latex], [latex]\begin{array}{c}A\left(t\right)\hfill & =P{\left(1+r\right)}^{t}\hfill & \text{Use the compound interest formula}.\hfill \\ 40,000\hfill & =P{\left(1+0.06\right)}^{18}\hfill & \text{Substitute using given values }A\text{, }r, n\text{, and }t.\hfill \\ 40,000\hfill & =P{\left(1.06\right)}^{18}\hfill & \text{Simplify}.\hfill \\ \frac{40,000}{{\left(1.06\right)}^{18}}\hfill & =P\hfill & \text{Isolate }P.\hfill \\ P\hfill & \approx 14,013.75\hfill & \text{Divide and round to the nearest dollar}.\hfill \end{array}[/latex].
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