Interest Formulas: Whole Year Loan Calculations

Solving for the unknown factor for the formula when time is stated in whole years:

PXRXT=I P = Principle (The amount borrowed before interest) R = Rate (stated as a one year rate) T = Time (for this handout we will state time in years) I = Interest (Cost to borrow money from another entity)
This box has the basic formula:

Interest

Principle

Rate

Time

This box shows the basic formula to find principle:

Interest

Principle

Rate

Time

MJC Revised 1/2012

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Interest Formulas: Whole Year Loan Calculations

Example: Cindy borrows money with a rate of 5% for one year with an interest of $250. Cindys principle will be $5,000.

This box shows the basic formula to find rate.

Interest

Principle Rate Time

Example: Cindy borrows money with a principle of $5,000 for one year with an interest of $250. Cindys rate will be 5%.

MJC Revised 1/2012

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Interest Formulas: Whole Year Loan Calculations

This box shows the basic formula to find time:

Interest

Principle Rate Time

Example: Cindy borrows money with a principle of $5,000, a rate of 5% and with an interest of $250. Cindys time will be 1 year.

MJC Revised 1/2012

Page 3

Interest Formulas: Whole Year Loan Calculations

This box shows the basic formula to find interest.

Interest

Principle Rate Time

PXRXT=I Example: Cindy borrows money with a principle of $5,000, a rate of 5% and with a time of one year. Cindys interest will be $250.

$5,000 X 5% X 1 = I $5,000 X 5% = $250

MJC Revised 1/2012

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