Simple Interest & APR Worksheet for 14-Year-Olds — Practice I = Prt Money Problems

Instructions

In these problems, we will be working with simple interest. Simple interest is a fixed percentage of the principal amount that is earned or paid over a period of time. We will use the formula:

I = P × r × t

Where:

• I = Interest (the amount of money earned or paid)
• P = Principal (the initial amount of money borrowed or invested)
• r = annual interest rate (APR), which must be converted to a decimal for calculations. To convert, divide the percentage by 100 (e.g., 5% becomes 0.05).
• t = time, which must be in years. If time is given in months, convert it to years by dividing by 12 (e.g., 18 months becomes 18/12 = 1.5 years).

Read each question carefully to determine which variable you need to solve for. Show your work where possible.

Part 1: Calculate the Simple Interest (Solving for I)

1. You invest $800 in a savings account with an Annual Percentage Rate (APR) of 3%. How much simple interest will you earn after 5 years?
2. A loan of $3,500 is taken out with a simple interest rate of 7.5% per year. What is the amount of interest owed after 2 years?
3. You put $1,200 into an investment that earns 4% simple interest per year. How much interest will you have earned after 30 months?

Part 2: Finding the Missing Variable

For this section, you will need to rearrange the formula I = Prt to solve for a different variable.

4. You earned $240 in interest over 4 years from an account with a simple annual interest rate of 5%. What was the original principal amount you invested?
5. James borrowed $5,000 for a home improvement project. After 3 years, he paid $900 in simple interest. What was the annual interest rate (APR) on the loan?
6. Maria invested $2,000 in a bond that pays a simple interest rate of 6% per year. If she earned $600 in interest, for how many years was her money invested?

Part 3: Real-World Scenarios

Apply the simple interest formula to solve these multi-step problems.

7. Chloe wants to save up for a new laptop that costs $1,500. She invests $1,250 in an account with a simple APR of 8%. How many months will it take for her to earn enough interest to afford the laptop? (Hint: First, find out how much interest she needs to earn).
8. Kenji took out a student loan of $10,000. The loan has a simple interest rate of 4.2% per year. If he pays off the loan in 5 years, what is the total amount he will have to pay back (principal + interest)?
9. A credit card company charges a simple annual interest rate of 21% on unpaid balances. If you have a balance of $500 and do not make any payments or new charges, how much interest will you owe after just 3 months?
10. Leo received a loan from his uncle to start a small business. After 2 years, he paid his uncle back a total of $8,640. This total amount included the original loan plus the interest calculated at a 4% simple annual rate. How much was the original loan from his uncle? (Hint: Total Amount = P + I, and I = Prt. So, Total Amount = P + Prt)