Interest & hire purchase

Simple interest The principal is the amount initially invested or borrowed. Simple interest uses that same principal for each period, so the interest grows in direct proportion to elapsed time. The final amount is principal plus interest. I=Prt, where r is the annual rate as a decimal and t is time in years. Example At 4% per year, $1500 earns $60 each year. Over 18 months, t= 1812=1.5, giving interest of $60 x 1.5=$90 and a final amount of $1590. If the final amount is given, use A=P(1+rt) to find the principal, or subtract the principal first to find the interest before solving for the rate. Check that you converted months to years when the rate is annual.

The principal is the amount initially invested or borrowed. Simple interest uses that same principal for each period, so the interest grows in direct proportion to elapsed time. The final amount is principal plus interest.

$I=Prt$, where $r$ is the annual rate as a decimal and $t$ is time in years.

At 4% per year, $\$1500$ earns $\$60$ each year. Over 18 months, $t=\dfrac{18}{12}=1.5$, giving interest of $\$60\times1.5=\$90$ and a final amount of $\$1590$.

If the final amount is given, use $A=P(1+rt)$ to find the principal, or subtract the principal first to find the interest before solving for the rate. Check that you converted months to years when the rate is annual.