PART 1
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In this lesson, we will learn how to calculate simple interest, using some examples.

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Consider a loan of $5000 with the interest rate of 3%, for 2 years. Calculate the simple interest.

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Now, to calculate the interest, we can use the formula, I=Prt.

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Now, since the principal is given as $5000, we can substitute P with 5000.

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Similarly, since the interest rate is given as 3%, we can substitute r with 3%.

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Here, note that, we must change 3% into a decimal, before using it for calculation.

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To do so, we divide 3 with 100. This gives 0.03.

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Let’s continue, since the loan duration is 2 years, we can substitute t with 2.

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We can now calculate the interest.

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0.03 multiply with 2 gives 0.06. 5000 multiply with 0.06, gives 300.

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Hence, the interest I, is $300.

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Alright, that is all for this example.

PART 2
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Consider a loan of $3000, with the interest rate of 5%, for the duration of 6 months. Calculate simple interest.

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Now, to calculate the interest, we can use the formula, I=Prt.

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Since the principal is given as $3000, we can substitute P with 3000.

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Similarly, since the interest is given as 5%, we can substitute r with 5%. Note that, we have to convert this 5% into a decimal.

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To do so, we divide 5 with 100. This gives 0.05.

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Next, the loan duration is given as 6 months. Hence, we can substitute t with 6 months.

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Note that, since the loan duration is always in 'year'. We must convert 6 months into year.

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To do so, since 1 year has 12 months, we divide 6 with 12.

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This gives 0.5 year. Now, we can start calculating the interest.

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0.05 multiply with 0.5, gives 0.025.

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3000 multiply with 0.025, gives 75.

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Therefore, the get the interest I = $75.

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That is all for this example.

PART 3
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Consider a loan with a principal of $2000, the loan duration is 4 years, and the interest after 4 years is $800. Find the loan's interest rate, r.

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We start with the simple interest formula, I = Prt.

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Since the interest is given as $800, we can substitute I with 800.

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Similarly, since the principal is given as $2000, we can substitute P with 2000. Next, the loan duration is given as 4 years. Hence, we can substitute t, with 4.

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We can simplify by multiplying 2000, with 4. This gives 8000.

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Now we have, 8000r=800. Let's rewrite it here.

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To find r, we need to remove 8000.

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To do so, we divide both sides of the equation with 8000.

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This gives, r equals to, 800/8000. 800 divided by, 8000 gives, 0.1.

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Now, we have the interest rate as, r=0.1.

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Now, rather than leaving the answer like this, it is better to change 0.1 to percent.

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We can do so, by multiplying 0.1 with 100. This gives, 10%.

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Hence, the interest rate for this loan is 10%.

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That is all for this example.