Use the simple interest formula I=prt, where I is the interest, p the principal, r the annual interest rate, and t the time in years.
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Practice makes perfect
If we deposit money in a savings account, the bank pays us interest for the use of our money. To calculate the interest I, we use the simple interest formula.
I= p r t, where...
I& = Interest
p& = Principal
r& = Annual interest rate
t& = Time (in years)Now, we made a deposit of $500 in a savings account and in 2 years we earned $ 17 in interest.
I= 17, p= 500, t= 2
To calculate the annual interest rate, we will substitute these values into the simple interest formula and solve for r. Let's go!
