Interest Algebra Word Problem Game

Interest Algebra Word Problem Quiz/Game
This game focuses on solving word problems involving Interests. Interest problems including a wide range of interest applications: Simple Interest (linear growth) and Compound Interest (exponential growth). Scroll down the page for a more detailed explanation.

 

 

How to Play the Interest Algebra Explorer Game

1. Look at the Problem: Read the problem carefully. Solve it and select one of the answers.
   
2. Check Your Interest: If you selected the right answer, it will be highlighted in green. If you are wrong, it will be highlighted in red and the correct answer will be highlighted in green. A hint will be given to help you find the correct answer.
   
3. Get a New Problem: Click “Next Question” for a new problem.
   Your score is tracked, showing how many you’ve gotten right.
   
4. Finish Game When you have completed 10 questions, your final score will be displayed.
    
   

How to Solve Interest Algebra Word Problems
The Financial “Translation” Key
Before setting up an equation, you must identify the four core variables:
Principal (P): The starting amount of money.
Rate (r): The interest percentage (always convert to a decimal, e.g., 5% = 0.05).
Time (t): The duration (usually in years).
Interest (I) or Amount (A): I is the extra money earned; A is the total final balance (P + I)

Solving Simple Interest Problems
Simple interest is calculated only on the original principal.
The Formula: I = Prt
Example Problem:
“You invest $500 at a 6% simple interest rate. How much interest will you earn after 3 years?"
Identify: P = 500, r = 0.06, t = 3.
Set up: I = 500 × 0.06 × 3
Solve: I = $90.

Solving for a missing variable:
If the problem asks for the rate (r), you rearrange the algebra: \(r = \frac{I}{Pt}\).
Tip: If the time is given in months, divide by 12 (e.g., 6 months = 0.5 years).

Solving Compound Interest Problems
Compound interest is “interest on interest.” The money grows faster because the interest earned in year 1 is added to the principal for year 2.
The Formula: A = P(1 + r)^t
Example Problem:
“If you deposit $1,000 into an account paying 5% compounded annually, what is the balance after 2 years?"
Identify: P = 1000, r = 0.05, t = 2.
Set up: A = 1000(1 + 0.05)
Solve:
A = 1000(1.05)
A = 1000(1.1025)
A = $1,102.50.

Visualizing the Difference
Understanding the “shape” of the growth helps you check if your answer makes sense. Simple interest grows in a straight line, while compound interest curves upward.

Step-by-Step Strategy
Determine the Type: Does the problem say “simple” or “compounded”?
Convert the Rate: Move the decimal point two places to the left (e.g., 4.5% = 0.04).
Check Time Units: Ensure t is in years.
Plug and Solve: Use the order of operations (PEMDAS)—calculate the part inside the parentheses and the exponent first for compound interest.
 

This video gives a clear, step-by-step approach to explain how to solve interest algebra word problems.

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