UNIT 4: SIMPLE INTEREST FORMULA Objective: Apply the Interest Formula to calculate interest, principal, interest rate, and time Directions: Use the "study links" to study the concepts. Complete the Lesson Practice Problems below. Study links: Visit the helpful link below to review these concepts. http://www.mathsisfun.com/money/interest.html Note* All of the lessons within a Unit have the same study links. Introduction Use the Interest Formula to calculate how much interest (I) you will pay on money borrowed. You can also use the formula to calculate the principal (P), the interest rate (R), or the time (T), when given any three of the four values in the formula. Look carefully at the formula: You must divide the 'time' by 12, and then divide the 'P*R*T/12 by 100 Why divide the 'time' by 12? Because the time is calculated per year, and a year contains 12 months. Why divide the 'P*R*T' BY 100? Because you are converting to percentage, which is based on 100. Example #1: Find simple interest: P = $5000 R = 10% T = 15 mo I = ? 'I' is the missing value, or the unknown First, divide the 15 by 12 (the 12 refers to the 12 months in