Money Pro 2 0 1000

Posted on 5/1/2021 by admin

Pro 2 Live
Money Pro 2 0 1000

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Simple Interest Calculator

Simple interest is calculated only on the initial amount (principal) that you invested.

Example: Suppose you give $100 to a bank which pays you 5% simple interest at the end of every year. After one year you will have $105, and after two years you will have $110. This means that you will not earn an interest on your interest. Your interest payments will be $5 per year no matter how many years the initial sum of money stays in a bank account.

This calculator can be used to solve various types of simple interest problems. The calculator will print easy to understand step-by-step explanation.

Problem:

You deposit $1000 into a bank account and received $50 simple interest after 3 months. What had been the interest rate?

Result:

The interest rate was 20% per year.

Explanation:

STEP 1: Convert 3 months into years.

$$ text{ 3 months } = frac{ 3 }{12} text{ years} = 0.25 text{ years}$$

STEP 2: Find interest rate by using the formula $ I = P cdot i cdot t $, where I is interest, P is total principal, i is rate of interest per year, and t is total time in years.

In this example I = $50, P = $1000 and t = 0.25 years, so

$$ begin{aligned} I &= P cdot i cdot t i &= frac{I}{P cdot t} i &= frac{ 50 }{ 1000 cdot 0.25} i &= 0.2 = 20% text{ per year} end{aligned}$$

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Money Pro 2 0 1000

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