6th Grade Math Textbook, Fundamentals

Key Concept

Simple Interest

Interest principal • rate • time

Iprt

Time must be expressed in years

or a fractional part of a year.

Think

24 months 2 years

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7-13

Simple Interest

Objective To find simple interest• To find the total amount earned or due• To find the rate

of interest• To find the time that principal is left on deposit• To use spreadsheet software to

compute simple interest for different principals, rates, and lengths of time

Mr. Floyd borrowed $2500 from his brother to be paid back
in 3 years. He agreed to repay the money with interest at a
rate of 5.5% per year. How much interest will Mr. Floyd pay
at the end of the 3 years? What is the total amount or balance
due at the end of the 3 years?

is the amount of money borrowed or deposited.
is the amount earned or paid in exchange for the use
of money. is interest earned or paid onlyon the
principal for a stated period of time. The is the
percent of interest earned or paid. represents how long,
in years, the principal is borrowed or left on deposit. Time must
be in years or a fractional part of a year.

To find the amount of interest Mr. Floyd will pay, multiply

the principal, the rate of interest, and the time, in years.

To find the total amount, or balance due,add the interest

to the principal.

You can use a formula to find the interest.

Iprt

I$2500 • 5.5% • 3 Substitute $2500 for p, 5.5% for r, and 3 for t.

I$2500 • 0.055• 3 Write 5.5% as a decimal, then multiply.

I$412.50

Add the interest to the principal to find the total amount or balance due.

$2500 $412.50 $2912.50

So Mr. Floyd will pay $412.50 in interest. The balance due will be $2912.50.

You can find the annual rate of interest when you know the principal,

the time, and the interest amount.

Lupe has $365. If she deposits that money for 24 months and earns $36.50,

what is the annual rate of interest earned?

You can use the interest formula to find the rate of interest.

Iprt

36.50 365 • r• 2 Substitute 36.50 for I, 365 for p, and 2 for t.

36.50  730 r Multiply to simplify.

 Divide both sides by 730.

r0.05 Write the decimal as a percent.

r5%

So the annual rate of interest earned by Lupe’s deposit is 5%.

Time (t)

rate of interest (r)

Simple interest

Interest (I)

Principal (p)

730 r

730

36.50

730