15

LESSON

Solving Finance

Problems

Finance problems use the basic concepts of investment. There are three terms

that are used. Theinterest, also called thereturn, is the amount of money that

is made on an investment. Theprincipalis the amount of money invested, and

therateorinterest rateis a percent that is used to compute the interest. The

basic formula is

Interest¼PrincipalRateTime

or

I¼PRT

In these problems, the interest used is simple interest per year, and the time

is one year. The problems can be set up using a table similar to the ones used

in the previous lessons. The equation is derived from the following:

Interest from firstþInterest from second¼Total interest

investment investment

160

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