To find the simple interest we'll plug it into one of the two available formulas. I will use both formulas so you can determine which is easiest for you, for future problems.
r = I/Pt or I = Prt
(the / represents division)
Let's define and plug.
r = the rate (we'll be solving for r)
I = the total interest earned within the time frame ($2)
P= the principal amount ($100)
t = the total time the principal accrued interest. (6 months/ .5years)
**Because this is in a monthly basis, lets change it into a year to make it easier**
we'll just divide 6 months by 12 months.
6 ÷ 12 = 0.5 years
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Let's use the first formula first. r = I / Pt
r = 2 / 100 (0.5)
100 x 0.5 = 50
We're now left with: r = 2 / 50
Divide what we have left.
2 ÷ 50 = 0.04
This is our simple interest but we have to convert it into a percentage. To convert the decimal to the percentage, we'll move the decimal two places to the right to make 4.0.
Therefore, our simple interest would be 4%
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let's set up the second formula: I = Prt
2 = 100 (r) (0.5)
2 = 50 (r)
2 ÷ 50 = 0.04
0.04 in percentage = 4%
