Simple Interest Worksheet
The formula for calculating simple interest on a loan or investment is pretty straightforward: I = Prt, or principal times rate times time.
It’s not complicated, but just like anything, it takes a little practice to get the hang of. Our worksheet features 10 real-life scenarios that will guide you through the calculation and allow you to check your work. (Answers are at the bottom.) Download it or work out the math on a separate piece of paper.
Practice makes perfect!
Simple Interest Worksheet
1. Alexander needs money for a necessary medical expense. He takes out a personal loan of $2,000 with a one-year term and an annual simple interest rate of 5%. How much interest will Alexander owe if he pays the entire loan by the end of the first year?
2. Tamara’s parents invested in a bond when she was born to help pay for her education. Her parents invested $10,000 at a yearly non-compounding simple interest rate of 2.5%. What will the total amount in the account be by the time she is 18 years old? How much will her parents’ investment earn in simple interest?
3. OppU Bank is offering a savings account for new customers with an unbelievably high simple interest rate for only one year. Mo jumps on the chance and deposits $500. If the total amount in his account is $800 after the year, what interest rate did OppU Bank offer?
4. Troy owes his friend, Lee, $60 for a ticket to a rock concert they attended last semester. Lee reminds Troy that they agreed to a yearly interest rate of 4%. By the time Troy pays Lee back, he owed $1.20 in interest. How long did it take Troy to reimburse his friend?
5. Safia opens a new savings account with a 2.25% non-compounding simple interest rate. She deposits $3,500 and earned $3,696.88 total by the time she checks the account again. How long was the money left untouched in the savings account?
6. Jacqueline took out a personal line of credit in her senior year of college with an annual simple interest rate of 4%. She takes 51 months to pay off the loan in full and pays $1,530 in interest. How much was the original line of credit amount? How much did Jacqueline pay total?
7. Mr. Jackson made a one-time deposit of $57,000 into his credit union’s retirement account when he was 25 years old. The account has a non-compounding annual simple interest rate of 3.35%. If Mr. Jackson checks this retirement account when he is 72 years old, how much will he have earned in interest? What will be the total amount in his credit union retirement account?
8. Lianne’s car broke down the weekend before she started a new job. She borrowed $880 from her parents, at an annual interest rate of 3%, to quickly pay for the car repairs. If Lianne paid her parents a total of $893.20 in six months, how much simple interest did she pay?
9. Rie invested her work bonus in a bond with a monthly simple interest rate of 0.8%. The bond earned her $5,016 total, of which $2,016 was interest. How many years was the money invested?
10. Gabriel asked to borrow $420 from his roommate, Julian, to purchase new electronics after his laptop stopped working. Julian agreed and told Gabriel that they could figure out an interest rate later. Gabriel paid Julian a total of $426.93 at the end of six months. What was the simple annual interest rate that Gabriel ended up paying his roommate?
Answers: 1. I = $100 2. T = $14,500 I = $4,500 3. r = 60% 4. t = 6 months 5. t = 2 years 6 months 6. P = $9,000 T = $10,530 7. I = $89,746.50 T = $146,746.50 8. I = $13.20 9. t = 7 years 10. r = 3.3%
What Is Simple Interest?
Simple interest is one way that interest can be assessed on a loan or investment. (Some examples of simple interest in the financial world might include auto loans, installment loans, savings accounts, and certificates of deposit.) Unlike compound interest (the other common way that interest is calculated), simple interest is assessed for the original sum of money (principal) that’s borrowed or invested — not the original sum of money plus any interest added to it.
Compared to compound interest, simple interest grows more slowly. This means that a loan that charges simple interest will be less expensive for the borrower. However, the flipside is that an investment will also grow more slowly and yield less money for the investor. So: simple interest will save you money if you’re a borrower, but it will cost you money if you’re an investor or lender.
To calculate simple interest, multiply the principal on a loan or investment by the interest rate by the time over which interest is being charged. (Remember: I = Prt.) And make sure that the rate and time coordinate. For instance, an interest rate that is charged annually will need to be multiplied by the number of years (not months or days) that interest is being charged. On the other hand, if the interest is charged monthly, the “t” in the formula would be the number of months that interest is being charged.