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Simple Interest Word Problems

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Videos, worksheets, solutions, and activities to help Algebra students learn how to solve word problems that involve interest.

How to solve word problems using the simple interest formula?
The simple interest formula is
interest = principal × rate × time or I = Prt

How to use the Simple Interest Formula?
Example: How much interest is earned in five years on $3,000 invested at an interest rate of 9% per year?
Interest Word Problems - Algebra Help
How to solve simple interest word problems?
Example: Pam invested $5000. She earned 14% on part of her investment and 6% on the rest. If she earned a total of $396 for the year, how much did she invest at each rate?

Simple Interest Word Problems
(1) Find the amount of interest earned by $8,000 invested at a 5% annual simple interest rate for 1 year.
(2) To start a mobile dog-grooming service, a woman borrowed $2,500. If the loan was for 2 years and the amount of interest was $175, what simple interest rate was she charged?
(3) A student borrowed some money from his father at 2% simple interest to buy a car. If he paid his father $360 in interest after 3 years, how much did he borrow?
(4) A couple invested $6,000 of their $20,000 lottery winnings in bonds. How much do they have left to in stocks?
(5) A college student wants to invest the $12,000 inheritance he received and use the annual interest earned to pay his tuition cost of $945. The highest rate offered by a bank is 6% annual simple interest. At this rate, he cannot earn the needed $945, so he decided to invest some of the money in a riskier, but more profitable, investment offering a 9% return. How much should he invest at each rate?
(6) A credit union loaned out $50,000, part at an annual rate of 6% and the rest at an annual rate of 12%. The collected combined simple interest was $3600 that year. How much did the credit union loan out at each rate?
Example: Suppose $7,000 is divided into two bank accounts. One account pays 10% simple interest per year and the other pays 5%. After three years there is a total of $1451.25 in interest between the two accounts. How much was invested into each account (rounded to the nearest cent)?


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