Multiply the principal (P) by the annual* interest rate as a decimal (r) and the time in years* (t). *The time period may be expressed in months, etc.
For example, $2000 invested at 7% simple interest for 5 years: I = Prt = 2000x0.07x5 = 140x5 = $700.
A $5000 investment at an annual simple interest rate of 4.4% earned as much interest after one year as another investment in an account that earned 5.5% annual simple interest. How much was invested at 5.5%?
$2400
the interest rate is lower than on comparable investments
What is the amout of interest that will be earned on an investment of $8000 at 10% simple interest for 3 years
No. I is as described for the stated period.
Compound interest gives you more, but at a low interest rate (less than 10%), the difference is negligible.
Alright, listen up, honey. To solve simple investment problems using simple interest, you just need to multiply the principal amount by the interest rate and the time period. Add the interest to the principal, and voila, you've got your total amount. It's basic math, darling, nothing to lose sleep over.
320
Compound interest is more advantageous for long-term investments because it allows the interest to be calculated on both the initial investment and the accumulated interest, leading to faster growth of the investment over time.
Simple interest (compounded once) Initial amount(1+interest rate) Compound Interest Initial amount(1+interest rate/number of times compounding)^number of times compounding per yr
There are many simple interest calculators online that you can find. I found the one at http://easycalculation.com/simple-interest.php to be simple and accurate.
If the interest is simple interest, then the value at the end of 5 years is 1.3 times the initial investment. If the interest is compounded annually, then the value at the end of 5 years is 1.3382 times the initial investment. If the interest is compounded monthly, then the value at the end of 5 years is 1.3489 times the initial investment.