# Percents

## Solve Simple Interest Applications


### Use the Simple Interest Formula

Do you know that banks pay you to let them keep your money? The money you put in the bank is called the principal,  and the bank pays you interest,  The interest is computed as a certain percent of the principal; called the rate of interest,  The rate of interest is usually expressed as a percent per year, and is calculated by using the decimal equivalent of the percent. The variable for time,  represents the number of years the money is left in the account.
The formula we use to calculate simple interest is  To use the simple interest formula we substitute in the values for variables that are given, and then solve for the unknown variable. It may be helpful to organize the information by listing all four variables and filling in the given information.
In the next example, we will use the simple interest formula to find the principal.
Now we will solve for the rate of interest.

### Solve Simple Interest Applications

Applications with simple interest usually involve either investing money or borrowing money. To solve these applications, we continue to use the same strategy for applications that we have used earlier in this chapter. The only difference is that in place of translating to get an equation, we can use the simple interest formula. 
We will start by solving a simple interest application to find the interest.
There may be times when you know the amount of interest earned on a given principal over a certain length of time, but you don't know the rate. For instance, this might happen when family members lend or borrow money among themselves instead of dealing with a bank. In the next example, we'll show how to solve for the rate.
There may be times when you take a loan for a large purchase and the amount of the principal is not clear. This might happen, for instance, in making a car purchase when the dealer adds the cost of a warranty to the price of the car. In the next example, we will solve a simple interest application for the principal.
In the simple interest formula, the rate of interest is given as an annual rate, the rate for one year. So the units of time must be in years. If the time is given in months, we convert it to years.

### Key Concepts

1. Simple interest


### Practice Makes Perfect

Use the Simple Interest Formula 
In the following exercises, use the simple interest formula to fill in the missing information.
In the following exercises, solve the problem using the simple interest formula.
Solve Simple Interest Applications 
In the following exercises, solve the problem using the simple interest formula.

### Everyday Math


### Writing Exercises


### Self Check

ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.



ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
