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Mathematics » Introducing Percents » Solve Simple Interest Applications

# Solving Simple Interest Applications

This is a lesson from the tutorial, Introducing Percents and we encourage you to log in or register before you continue, so that you can track your progress.

## Solving 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 tutorial. 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.

## Example

Nathaly deposited $$\text{\12,500}$$ in her bank account where it will earn $$\text{4%}$$ interest. How much interest will Nathaly earn in $$5$$ years?

### Solution

We are asked to find the Interest, $$I.$$

Organize the given information in a list.

$$\begin{array}{ccc}\hfill I& =& ?\hfill \\ \hfill P& =& \text{\12,500}\hfill \\ \hfill r& =& \text{4%}\hfill \\ \hfill t& =& \text{5 years}\hfill \end{array}$$