GMAT Math : Calculating simple interest

Study concepts, example questions & explanations for GMAT Math

Create An Account

All GMAT Math Resources

22 Diagnostic Tests 693 Practice Tests Question of the Day Flashcards Learn by Concept

Example Questions

← Previous 1 2 Next →

Example Question #1 : Interest Problems

Grandpa Jack wants to help pay for college for his grandson, Little Jack. Little Jack is currently 8 years old. Grandpa Jack makes a one-time deposit into an account that earns simple interest every year. Grandpa Jack invests $10,000 now and in ten years, that will grow to $15,000. What rate of simple interest did Grandpa Jack receive?

Possible Answers:

Correct answer:

Explanation:

To calculate simple interest, the formula is

FV= PV (1+it)

where stands for Future Value, stands for Present Value, stands for the interest rate, and stands for the number of periods (in this case years). So plugging in,

15,000 = 10,000(1+10i)= 10,000 + 100,000i

Solving this we get i=.05

or 5%

ALTERNATE SOLUTION:

Another way of finding this is to calculate the amount of interest per year. Since this is simple interest, Grandpa Jack earns the same amount of interest per year. The total interest earned is 15,000-10,000= 5,000. $5,000 over 10 years, equates to $500 per year. $500 divided by the original $10,000 is .05, or 5%.

Report an Error

Example Question #2 : Interest Problems

How much interest would an investment yield if the principal of $\$$ 76,000 is invested for years at a $10\%$ simple interest?

Possible Answers:

$\$$ 38000

$\$$ 3800

$\$$ 4500

$\$$ 45000

Correct answer:

$\$$ 38000

Explanation:

I=p*r*t

I=(76000)(0.10)(5)

I=38000

Report an Error

Example Question #3 : Interest Problems

What rate does Johnny need if he would like to yield $\$$ 10000 in interest from a principal of $\$$ 25000 in years?

Possible Answers:

$8\%$

$12\%$

$6\%$

$10\%$

Correct answer:

$8\%$

Explanation:

I=p*r*t

$r=\frac{I}{p*t}$

$r=\frac{10000}{25000*5}$

r=0.08

0.08*100= $8\%$

Report an Error

Example Question #101 : Gmat Quantitative Reasoning

A bank offers a business a loan in the amount of $13,000 with a simple annual interest rate of 9%. How much will the business owe the bank after 3 years?

Possible Answers:

14,760

14,170

16,835

13,900

16,510

Correct answer:

16,510

Explanation:

The accrual of simple interest can be found in two steps. First, multiply the principal amount by the interest rate. Second, multiply that result by the number of years during which interest will accrue.

$13,000\cdot 0.09=1,170$

$1,170\cdot 3=3510$

The question asks for the total amount that the business will owe the bank, so we must add the interest accrued to the principal amount.

3,510+13,000=16,510

Report an Error

Example Question #1 : Interest Problems

John has $\$100,000$ to invest for years for $8\%$ return. How much simple interest will his investment yield?

Possible Answers:

$\$45,000$

$\$50,000$

$\$30,000$

$\$40,000$

Correct answer:

$\$40,000$

Explanation:

Simple interest formula: I=prt

I= (100,000)*(0.08)*(5)

$I= \$40,000$

Report an Error

Example Question #6 : Interest Problems

How many years would it take Marissa to make $\$20,000$ in interest using a simple interest investment of $\$200,000$ in principal at 5% return?

Possible Answers:

$3\ years$

$4\ years$

$5\ years$

$2\ years$

Correct answer:

$2\ years$

Explanation:

Simple interest formula is: I=prt

Therefore, solving for the time factor:

$t= \frac{I}{pr}$

$t= \frac{20,000}{200,000*0.05}$

$t=2\ years$

Report an Error

Example Question #7 : Interest Problems

Using the simple interest formula, what initial investment does Terry have to make to earn $\$30,000$ in interest if there is an $8\%$ return for years?

Possible Answers:

$\$80,000$

$\$75,000$

$\$85,000$

$\$90,000$

Correct answer:

$\$75,000$

Explanation:

Simple interest formula: I=prt

Therefore, solving for the principal factor in the equation:

$p=\frac{I}{rt}$

$p=\frac{30,000}{0.08*5}$

$p=\$75,000$

Report an Error

Example Question #8 : Interest Problems

What return does Florence have to yield in order to make $\$10,000$ in interest off of a simple investment of $\$100,000$ for years?

Possible Answers:

$3.67\%$

$4\%$

$5\%$

$3.33\%$

Correct answer:

$3.33\%$

Explanation:

Simple interest formula: I=prt

Therefore, solving for the rate factor in the equation:

$r=\frac{I}{pt}$

$r=\frac{10,000}{100,000*3}$

$r=3.33\%$

Report an Error

Example Question #1 : Interest Problems

Jesse has $\$500,000$ to invest for years for $6\%$ return. How much simple interest will his investment yield?

Possible Answers:

$\$700,000$

$\$900,000$

$\$800,000$

$\$1,000,000$

Correct answer:

$\$900,000$

Explanation:

Simple interest formula: I=prt

I= (500,000)*(0.06)*(30)

$I= \$900,000$

Report an Error

Example Question #10 : Interest Problems

How many years would it take Julissa to make $\$35,000$ in interest using a simple interest investment of $\$70,000$ at a $13\%$ return?

Possible Answers:

$4.24\ years$

$3.85\ years$

$3.14\ years$

$3.5\ years$

Correct answer:

$3.85\ years$

Explanation:

Simple interest formula is: I=prt

Therefore, solving for the time factor:

$t=\frac{I}{pr}$

$t=\frac{35,000}{70,000*0.13}$

$t=3.85\ years$

Report an Error

← Previous 1 2 Next →

All GMAT Math Resources

22 Diagnostic Tests 693 Practice Tests Question of the Day Flashcards Learn by Concept

Popular Subjects

Math Tutors in Houston, SAT Tutors in Miami, MCAT Tutors in New York City, GMAT Tutors in Boston, ISEE Tutors in Boston, MCAT Tutors in Denver, Spanish Tutors in Dallas Fort Worth, GMAT Tutors in Miami, Reading Tutors in Washington DC, Physics Tutors in Miami

Popular Courses & Classes

GRE Courses & Classes in Dallas Fort Worth, SAT Courses & Classes in Seattle, GMAT Courses & Classes in Philadelphia, GRE Courses & Classes in San Diego, ACT Courses & Classes in Chicago, GMAT Courses & Classes in San Francisco-Bay Area, LSAT Courses & Classes in Boston, GMAT Courses & Classes in Houston, MCAT Courses & Classes in San Diego, ACT Courses & Classes in Los Angeles

Popular Test Prep

SAT Test Prep in Dallas Fort Worth, ISEE Test Prep in Seattle, SAT Test Prep in Miami, ACT Test Prep in Los Angeles, GRE Test Prep in Philadelphia, GRE Test Prep in Atlanta, SAT Test Prep in Phoenix, GRE Test Prep in New York City, ACT Test Prep in Houston, ISEE Test Prep in Boston

DMCA Complaint

If you believe that content available by means of the Website (as defined in our Terms of Service) infringes one or more of your copyrights, please notify us by providing a written notice (“Infringement Notice”) containing the information described below to the designated agent listed below. If Varsity Tutors takes action in response to an Infringement Notice, it will make a good faith attempt to contact the party that made such content available by means of the most recent email address, if any, provided by such party to Varsity Tutors.

Your Infringement Notice may be forwarded to the party that made the content available or to third parties such as ChillingEffects.org.

Please be advised that you will be liable for damages (including costs and attorneys’ fees) if you materially misrepresent that a product or activity is infringing your copyrights. Thus, if you are not sure content located on or linked-to by the Website infringes your copyright, you should consider first contacting an attorney.

Please follow these steps to file a notice:

You must include the following:

A physical or electronic signature of the copyright owner or a person authorized to act on their behalf; An identification of the copyright claimed to have been infringed; A description of the nature and exact location of the content that you claim to infringe your copyright, in \ sufficient detail to permit Varsity Tutors to find and positively identify that content; for example we require a link to the specific question (not just the name of the question) that contains the content and a description of which specific portion of the question – an image, a link, the text, etc – your complaint refers to; Your name, address, telephone number and email address; and A statement by you: (a) that you believe in good faith that the use of the content that you claim to infringe your copyright is not authorized by law, or by the copyright owner or such owner’s agent; (b) that all of the information contained in your Infringement Notice is accurate, and (c) under penalty of perjury, that you are either the copyright owner or a person authorized to act on their behalf.

Send your complaint to our designated agent at:

Charles Cohn Varsity Tutors LLC
101 S. Hanley Rd, Suite 300
St. Louis, MO 63105

Or fill out the form below:

Do not fill in this field

Contact Information

* Full legal name

Company name

* Phone number

* Email address

Address

* Address1

Address2

* City

* State

* Zipcode

* Country

Complaint Details

* URL of copyrighted work (where your original material is located)

* Please describe the copyrighted work so that it may be easily identified

I am the owner, or an agent authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.

I have a good faith belief that the use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.

This notification is accurate.

I acknowledge that there may be adverse legal consequences for making false or bad faith allegations of copyright infringement by using this process.

* Signature (your digital signature is legally binding)

Email address:
Your name:
Feedback:

GMAT Math : Calculating simple interest

Study concepts, example questions & explanations for GMAT Math

All GMAT Math Resources

Example Questions

Example Question #1 : Interest Problems

Example Question #2 : Interest Problems

Example Question #3 : Interest Problems

Example Question #101 : Gmat Quantitative Reasoning

Example Question #1 : Interest Problems

Example Question #6 : Interest Problems

Example Question #7 : Interest Problems

Example Question #8 : Interest Problems

Example Question #1 : Interest Problems

Example Question #10 : Interest Problems

All GMAT Math Resources

Report an issue with this question

DMCA Complaint

Contact Information

Address

Complaint Details