Hi Alissa,
The formula is amount of interest = principle x rate x time
The principle is the amount of the loan = 1000
The time is 19 months which is 1 7/12 years which is 1.58888 years . . you have to convert it to years because annual simple interest is the percent per year.
The amount of interest is 80
80 = 1000 x rate x 1.589
80 = 1589r
r = .05 which is 5% (move the decimal two place to the right)
You can check this answer by multiplying 1000 x .05 = $50 after 12 months.
You add this to the principle --> 1050 and this becomes the new principle for the next year, but you're only going another 7 months, so the interest rate .05 x 7/12 = 0.029
1050 x 0.029 = 30.45 which rounds to 30
Adding 30 and 1050 gets you 1080.
It works!
Dan
