Often considered the least favorite in the math classroom, interest problems deserve a little more love. What are interest problems? They are a type of problem in which a formula is used to find the amount of interest needed given the variables: principle, amount, rate, and time (typically in years).
Multiple students were asked about their experiences with these problems. Here are their responses: “They are so boring and dumb!” one student exclaimed. “I hate them because of the formulas,” another said. “These are my favorite types of word problems!” one student beamed. At least someone likes them!
For interest problems, there are multiple formulas that can be used depending on the situation presented by the problem. For example, a problem involving compound interest requires a different formula than a problem involving a simple rate of change.
How can they be used in the real world?
Simple interest formula can be used in many ways. Let’s say you have a car loan for $10,000 and 4% interest. To find interest per year, simply multiply 10,000 x 0.04. This comes out to be $400. This formula is useful because there is no need for a calculator. When making purchases and decisions in real time, you can figure out which option will benefit you more.
These problems are very useful for subjects like financial algebra and are used every day by accountants and bankers. Adults often need to make decisions with money that utilize this type of math. However, these formulas are important to students as well! We just need to use them correctly!