WORD PROBLEMS ON SIMPLE INTEREST

Problem 1 :

Find the simple interest rate (to the nearest per cent) which will allow €2500 to earn €675 interest in 3 years.

Solution:

Given, P = 2500, T = 3 years, SI = 675

Problem 2 :

What sum of money would you have to invest for 5 years at 11% simple interest to produce interest at €3080?

Solution:

Given, SI = 3080, T = 5 years, R = 11%

Problem 3 :

For how many years would $8000 have to be invested at 11 1/2% simple interest to produce €5520 interest?

Solution:

Given, P = 8000, SI = 5520, R = 11 1/2%

Problem 4 :

What simple interest rate would allow €6000 to grow to an amount €14550 in 10 years?

Solution:

Given, P = 6000, A = 14550, T = 10 years

A = P (1 + rt)

14550 = 6000 (1 + 10r)

14550 = 6000 + 60000r

14550 - 6000 = 60000r

8550 = 60000r

Problem 5 :

What simple interest would $8000 earn in 3 months if the rate of interest is 11 1/4 % pa?

Solution:

Given, P = 8000, T = 3 months = 3/12 years

T = 0.25 years, R = 11 1/4% = 45/4%

Problem 6 :

A building society pays interest daily. If an amount of $1564 were invested at 5.5% pa, how much simple interest would be earned in:

i. 1 day?     ii. 3 days?     iii. 29 days?

Solution:

i. Given, P = $1564, R = 5.5%, T = 1 day = 1/365 year

ii. Given, P = $1564, R = 5.5%, T = 3 days = 3/365 year

iii.  Given, P = $1564, R = 5.5%, T = 29 days = 29/365 year