**Enter your interest rate as a decimal
P = Principal (money borrowed)
r = Rate (interest)
t = Years (time)
I = Interest Charged
Simple Interest FormulaInterest Charged (I) =
Sample Simple Interest Problem
Jayden needs to borrow money for a new car, but he isn't sure what loan is better. If he finances his car through one bank, the dealership will sell the car to him for $500 dollars less than sticker price, they will lend him $10,500 at 6% for 4 years. The other bank will lend him $11,000 for 4 years at 5%. Which loan is in his best interest (HA! no pun intended).
p = $10,500
r = .06
t = 4
The results show interest charged is: $2520 (don't forget to enter the % in decimal form ie,.06)
p = $11,000
r = .04
t = 4
The results show interest charged is: $2,220.
If Mike goes with bank 1, he will pay $13,020, if he goes with bank 2 he will pay $13,220. Bank 1 is the better deal.