Simple interestTo find the simple interest, use this 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 × 5% × 4 = 2000 × 0.05 × 4 Interest = 100 × 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 × 4% × 1 Interest = 2,000,000 × 0.04 × 1 Interest = 80,000 × 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! Exercises # 3 Compute the interest if the principal is 100 dollars at a rate of interest of 2% for 10 year Using a calculator, Interest = 100 × 2% × 10 Interest = 100 × 0.02 × 10 Interest = 2 × 10 = 20 With little money invested and low interest, 10 years investment gives you a mere 20 dollars This might be a waste of time!





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