Step by step
The question
Question: Ben borrows $1200 at 5% simple interest per year.
How much will he pay back in 2 years?
1 Find what we know
What do we know?
The money put in: $1200.
The rate: 5% each year.
The time: 2 years.
What do we want?
All the money at the end.
2 Name the unknown
We don't know the interest.
So we call it x.
5% means 5 out of 100: 5/100.
Here is the rule for it.
Interest = money put in, times the rate, times the years.
In short: I = P × r × t.
Interest is extra money for using money.
Simple interest is the same amount every year.
3 Write the equation
In words: the money put in, times the rate, times the years, makes the interest.
So the equation is x = 1200 × 5/100 × 2.
Now we solve it.
4 Multiply the numbers we know
Cancel first.
1200 and 100 can both be divided by 100.
1200 becomes 12, and the 100 is gone.
Write what is left.
Multiply: 12 times 5 times 2 is 120.
So x = 120!
5 Answer the question
All the money: the $1200 put in, plus $120 interest, is $1320.
Careful!
The interest alone is not the answer.
The question asks for all the money: the money put in, plus the interest.
So there is $1320 at the end.
6 Check
Let's check in the story.
In 1 year: 5/100 of $1200 is $60.
2 years: $120 of interest.
Plus the money put in: $1320.
Does it make sense?
The interest is less than the money put in.
That makes sense for 5% a year.
So the answer is right!
Let's look back.
First: find what we know.
Then: name the unknown.
Then: write the equation.
Then: solve it.
Then: answer the question.
Last: check.