Simple interest

To find the simple interest, simply use the following formula:

Interest = Principal * Rate of interest * Time

The principal is the amount of money you borrow or invest.

The rate of interest is the percent charged for the use of money

Exercises #1:

Compute the interest if the principal is 2000 dollars at a rate of interest of 5% for 4 years.

Using a calculator,

Interest = 2000 times 5% times 4 = 2000 times 0.05 times 4

Interest = 100 times 4 = 400

Exercises # 2

Compute the interest if the principal is 2,000,000 dollars at a rate of interest of 4 % for a year

Using a calculator,

Interest = 2,000,000 times 4 % times 1

Interest = 2,000,000 times 0.04 times 1

Interest = 80,000 times 1 = 80,000

If you have 2 millions dollars and your bank pay you 4% interest every year, you will earn 80, 000 dollars every year.

Great, you can quit your day time job!