Simple Interest Word Problems Worksheet with Formula and Practice Questions

Let's solve each of these simple interest word problems step by step using the formula:

$$
I = P \cdot r \cdot t
$$

Where:
- $ I $ = Interest earned or paid (in dollars)
- $ P $ = Principal (initial amount in dollars)
- $ r $ = Annual interest rate (as a decimal)
- $ t $ = Time in years

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1. A bank is offering 2.5% simple interest on a savings account. If you deposit $5000, how much interest will you earn in one year?

Given:
- $ P = 5000 $
- $ r = 2.5\% = 0.025 $
- $ t = 1 $

$$
I = 5000 \cdot 0.025 \cdot 1 = 125
$$

✔ Answer: $125 interest earned.

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2. Jessica borrowed $15,000 for 3 years at 9% annual simple interest. How much interest will she pay? What is the total amount repaid?

Given:
- $ P = 15,000 $
- $ r = 9\% = 0.09 $
- $ t = 3 $

$$
I = 15000 \cdot 0.09 \cdot 3 = 4050
$$

Total repayment = Principal + Interest = $15,000 + $4,050 = $19,050

✔ Answer: Interest = $4,050; Total repayment = $19,050

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3. Nancy invested $6000 at 3% and earned $450 in interest. How long was the money invested?

Given:
- $ P = 6000 $
- $ r = 3\% = 0.03 $
- $ I = 450 $

We solve for $ t $:

$$
450 = 6000 \cdot 0.03 \cdot t \\
450 = 180t \\
t = \frac{450}{180} = 2.5
$$

✔ Answer: 2.5 years (or 2 years and 6 months)

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4. Mr. Johnson borrowed $8000 for 4 years and repaid $10,320. What was the interest rate?

Given:
- $ P = 8000 $
- $ t = 4 $
- Total repayment = $10,320 → so interest $ I = 10,320 - 8000 = 2320 $

Now solve for $ r $:

$$
2320 = 8000 \cdot r \cdot 4 \\
2320 = 32000r \\
r = \frac{2320}{32000} = 0.0725 = 7.25\%
$$

✔ Answer: 7.25%

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5. John’s parents deposited $1000 at 3.25% simple interest. How much will he have after 18 years?

Given:
- $ P = 1000 $
- $ r = 3.25\% = 0.0325 $
- $ t = 18 $

$$
I = 1000 \cdot 0.0325 \cdot 18 = 585
$$

Total amount = $1000 + $585 = $1,585

✔ Answer: $1,585

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6. Elaine borrowed $2,000 for 3 years at 5%. How much interest? Total repayment?

Given:
- $ P = 2000 $
- $ r = 0.05 $
- $ t = 3 $

$$
I = 2000 \cdot 0.05 \cdot 3 = 300
$$

Total repayment = $2000 + $300 = $2,300

✔ Answer: Interest = $300; Total repayment = $2,300

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7. TJ invested $4000 at 2% and earned $200 interest. How long was it invested?

Given:
- $ P = 4000 $
- $ r = 0.02 $
- $ I = 200 $

$$
200 = 4000 \cdot 0.02 \cdot t \\
200 = 80t \\
t = \frac{200}{80} = 2.5
$$

✔ Answer: 2.5 years

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8. Mr. Mogi borrowed $9000 for 10 years and repaid $20,000. What was the interest rate?

Given:
- $ P = 9000 $
- $ t = 10 $
- Repayment = $20,000 → $ I = 20,000 - 9,000 = 11,000 $

$$
11000 = 9000 \cdot r \cdot 10 \\
11000 = 90000r \\
r = \frac{11000}{90000} = 0.1222... = 12.22\%
$$

✔ Answer: Approximately 12.22%

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9. Bertha deposited $1000 at 7.5% simple interest. How much will she have after 50 years?

Given:
- $ P = 1000 $
- $ r = 0.075 $
- $ t = 50 $

$$
I = 1000 \cdot 0.075 \cdot 50 = 3750
$$

Total amount = $1000 + $3750 = $4,750

✔ Answer: $4,750

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10. Joshua borrowed $1000 and paid back $1050 in six months. What was the annual simple interest rate?

Given:
- $ P = 1000 $
- $ I = 1050 - 1000 = 50 $
- $ t = 6 \text{ months} = 0.5 \text{ years} $

Solve for $ r $:

$$
50 = 1000 \cdot r \cdot 0.5 \\
50 = 500r \\
r = \frac{50}{500} = 0.10 = 10\%
$$

✔ Answer: 10% annual simple interest

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✔ Final Answers Summary:

| Problem | Answer |
|--------|--------|
| 1 | $125 interest |
| 2 | $4,050 interest; $19,050 total |
| 3 | 2.5 years |
| 4 | 7.25% |
| 5 | $1,585 |
| 6 | $300 interest; $2,300 total |
| 7 | 2.5 years |
| 8 | ~12.22% |
| 9 | $4,750 |
| 10 | 10% annual interest |

Let me know if you'd like these formatted as a printable sheet!