In this video we discuss how to solve for or calculate principal in simple interest problems. We cover the formula for solving for principal in simple interest and go through some example problems.

Transcript/notes
The formula for calculating simple interest is interest equals, the principal, times the rate, times the time frame, which can be written as I equals p, times r, times t, or I equals prt.

If we want to solve for principal, we can modify this equation by dividing both sides by rate times time, R times T, and we get the formula principal equals, interest divided by rate times time.

As an example, let’s say that someone paid $250 in interest for a loan they had. The rate of simple interest was 5.5% and the loan was for 3 years, what was the principal, or initial amount of money they borrowed?

Using our formula of principal equals, interest divided by rate times time, the interest is $250, the rate is 5.5%, which we must convert to a decimal, and to do that, we move the decimal 2 places to the left to get .055, and the time is 3, for 3 years. So, we have principal equals, $250 divided by .055 times 3. .055 times 3 equals .165, and $250 divided by .165 equals $1515.15 rounded off. So, the principal, or initial amount borrowed was $1515.12.

Here are a couple more examples on the screen for you of how to solve for principal in simple interest problems.

Timestamps
0:00 Intro - Simple interest formula
0:15 Formula for principal in simple interest
0:25 Example problem solving for principal in simple interest
1:21 More example problems calculating for principal in simple interest

свернуть