Step by step
The question
Question: Tom puts $800 in a bank at 5% simple interest per year.
How much interest does he earn in 2 years?
1 Find what we know
What do we know?
The money put in: $800.
The rate: 5% each year.
The time: 2 years.
What do we want?
The interest.
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 = 800 × 5/100 × 2.
Now we solve it.
Careful!
5% is not 5.
It means 5 out of 100: 5/100.
Without the 100, the interest would be $8000: more than the money put in!
4 Multiply the numbers we know
Cancel first.
800 and 100 can both be divided by 100.
800 becomes 8, and the 100 is gone.
Write what is left.
Multiply: 8 times 5 times 2 is 80.
So x = 80!
5 Answer the question
So the interest is $80.
6 Check
Let's check in the story.
In 1 year: 5/100 of $800 is $40.
2 years: $80 of interest, like the story says.
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.