How to Find Simple Interest Rate: Definition, Formula & Examples


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question 1 of 3

Rebecca wants to borrow $500 to buy her favorite video game player and a couple of games. She asks a friend to lend her this amount, offering to pay him back $548 in 9 months. What is the annual interest rate for this short term loan?

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1. Sean needs to borrow $1000 to fly to Europe in the summer. His friend Tim offers him a loan over two years, at an annual interest rate of 4%. He can also borrow the same amount from his bank at an annual rate of 5%, but the loan needs to be paid back in 18 months. In addition, his cousin offers to loan him the $1000, provided that Sean pay her back $1100 in two years. Which of the following statements is true?

2. What is the future value of a loan of $2800 to be repaid in 8 months at an annual interest of 9%?

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About This Quiz & Worksheet

This quiz and worksheet set allow you to assess your understanding of simple interest and the formulas related to calculating it. In order to pass the quiz, you will need to complete practice problems that include solving for an annual interest rate and calculating the future value of a loan.

Quiz & Worksheet Goals

Utilize these assessment tools to check your knowledge of:

  • How to calculate a simple interest rate
  • How to find the amount of interest
  • How you solve for the future value of a loan

Skills Practiced

Practice these skills when you complete the quiz and worksheet:

  • Problem solving - use acquired knowledge to solve simple interest practice problems
  • Interpreting information - verify that you can read information regarding the formula to determine the future value of a loan
  • Knowledge application- use your knowledge to answer questions that ask you to find the amount of interest on a loan

Additional Learning

If you want to learn more on this subject, you can refer to the lesson called How to Find the Simple Interest Rate: Definition, Formula & Examples. Going over this lesson will also allow you to:

  • Define simple interest, interest rate, and principal
  • Know another name for future value
  • Identify the formula to calculate the simple interest
  • Recognize the two different formulas used to solve for future value