ACT Math : How to find simple interest

Study concepts, example questions & explanations for ACT Math

varsity tutors app store varsity tutors android store varsity tutors ibooks store

Example Questions

Example Question #1261 : Act Math

A credit union pays out interest to its members proportional to their contributions to savings accounts at the end of each financial year in which the union posts a profit. If at the end of the year, the credit union posts a profit of , and Antoine contributed  to his savings account when the year ended, how much interest is he entitled to?

Possible Answers:

Correct answer:

Explanation:

If the profit was  and the contributions were , then we can use the equation , where  is the principal,  is the rate and  is the number of periods of time interest is applied (in this case,  since this is a one-time payout).

Thus, Antoine is entitled to  in interest.

Example Question #1261 : Act Math

What interest is expected to be paid on a loan for $55,000 with 3% interest compounded annually over a period of 6 years?

Possible Answers:

Correct answer:

Explanation:

The simple interest formula is,

 where  is the principal,  is th rate of interest, and  is the number of years. So,

Learning Tools by Varsity Tutors