Week 2 - Lesson 2 - Solving for P, r and t

Re-arranging our basic simple interest formula to solve for principal, rate or time.

FinanceSimple Interest
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Week 2 - Lesson 2 - Solving for P, r and t

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Re-arranging our basic simple interest formula to solve for principal, rate or time.
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  1. Simple Interest – Lesson 2Solving for P, r and t

    Slide 1 - Simple Interest – Lesson 2Solving for P, r and t

    • Rob Sorensen
    • © Copyright 2015. All rights reserved.
  2. More Simple Interest Formula

    Slide 2 - More Simple Interest Formula

    • We can re-arrange our basic formula to solve for P, r or t as follows:
    • Rob Sorensen
    • 2
  3. Example – Finding the Principal

    Slide 3 - Example – Finding the Principal

    • How much would you have to deposit into a savings account paying 4% p.a. simple interest if you wanted to earn $20.00 over 6 months?
    • Rob Sorensen
    • 3
  4. Example – Finding the Rate

    Slide 4 - Example – Finding the Rate

    • If you borrow $1,000 for 4 months and the lender charges you $30 interest, what simple rate p.a. are they charging?
    • Rob Sorensen
    • 4
  5. Example – Finding the Time

    Slide 5 - Example – Finding the Time

    • How long will it take a $5,000 investment to earn $100 interest at a rate of 9% p.a.?
    • Rob Sorensen
    • 5
  6. Rob Sorensen

    Slide 6 - Rob Sorensen

    • Try It Out!
    • Joseph purchases an investment for $90,000. He sold it 30 days later for $91,000. What annual rate of return did he realize on his investment?
    • 6
  7. Success Strategies

    Slide 7 - Success Strategies

    • Take your time reading questions.
    • Write down everything that is given to you in the question as well as the unknown that you are trying to find.
    • Make sure that you are working in consistent units – i.e. if the rate is annual, you must convert your time to years.
    • Use all decimals during calculations – only round your final answer.
    • Learn how to use the DATE functions on your calculator.
    • Rob Sorensen
    • 7