Sect6 7SimpleInterest

Sect6 7SimpleInterest - Transcript

Lesson 7 8 Simple Interest Lesson
Standards NS 1 3 and NS 1 7 Objective Use the simple interest formula

If someone borrows money what factors influence If how much is paid back

Principal How much was borrowed Time How long it was borrowed for in years Rate What interest was charged annual rate Amount to Payback Principal Interest Interest Principal Rate Time

I P r t

Joe borrows 200 from the bank at 6 simple Joe interest for 3 years What interest does he owe and what is his total balance amount to payback

P 200 r 6 0 06 t 3
Interest

I P r t I 200 0 06 3

I 36
Interest owed 36

Balance Balance P I Balance 200 36 Balance 236 Balance 236

Juan invests 5000 in bonds for 6 months at an Juan annual interest rate of 7 How much interest did he earn and what is the balance in his account

P 5000 r 7 0 07 t 6 months 0 5 years
Interest

I P r t I 5000 0 07 0 5

I 175
Interest owed 175

Balance Balance P I Balance 5000 175 Balance 5175 Balance 5175

Find the simple interest and the balance Find 1 2000 at 4 for 9 mos P 2000 r 4 0 04 t 9 mos 0 75 yrs
I P r t I 2000 0 04 0 75 I 60

Balance P I Balance 2000 60 Balance 2060

Find the annual simple interest rate Find 1 2000 earns 420 simple interest over 3 years

P 2000 I 420 t 3 years I P r t 420 2000 r 3 420 6000r 6000 6000 0 07 r Annual Interest Rate 7

Find the annual simple interest rate Find 2 625 simple interest is earned on a 2 year loan of 5000 P 5000

I 625 t 2 years

I P r t 625 5000 r 2 625 10 000r 10 000 10 000 0 0625 r 1 r 6 25 or 6 4

Find the principal amount invested Find 1 3 Interest of 1650 is earned over 4 years at 5 2

I 1650 t 4 years r 5 5 0 055

I P r t 1650 P 0 055 4 1650 0 22P 0 22 0 22 7500 P
Principal 7500

Quick Draw for Points
You will have 60 seconds to solve each problem

The text is Simple Interest Problems

Example 1 Finding Interest on a Loan To buy a car Jessica borrowed 15 000 for 3 years at an annual simple interest rate of 9 How much interest will she pay if she pays the entire loan off at the end of the third year First find the interest she will pay I P r t I 15 000 0 09 3 I 4050 Use the formula Substitute Use 0 09 for 9 Solve for I

Example 1A Finding Total Payment on a Loan

What is the total amount that she will repay

You can find the total amount A to be repaid on a loan by adding the principal P to the interest I Jessica will pay 4050 in interest P I A principal interest total amount 15 000 4050 A Substitute 19 050 A Solve for A Jessica will repay a total of 19 050 on her loan

Example 2 TJ invested 4000 in a bond at a yearly rate of 2 He earned 200 in interest How long was the money invested I P r t 200 4000 0 02 t 200 80t 2 5 t Use the formula Substitute values into the equation Solve for t

The money was invested for 2 5 years or 2 years and 6 months

Example 3 Bertha deposited 1000 into a retirement account when she was 18 How much will Bertha have in this account after 50 years at a yearly simple interest rate of 7 5

I P r t

Use the formula

I 1000 0 075 50 Substitute Use 0 075 for 7 5 I 3750 Solve for I The interest is 3750 Now you can find the total

Example 3 Continued P I A Use the formula 1000 3750 A Substitute

4750 A Solve for A Bertha will have 4750 in the account after 50 years

Example 4 Mr Mogi borrowed 9000 for 10 years to make home improvements If he repaid a total of 20 000 at what interest rate did he borrow the money P I A Use the formula 9000 I 20 000 Substitute I 20 000 9000 11 000 Subtract 9000 from both sides

He paid 11 000 in interest Use the amount of interest to find the interest rate

Example 4 Continued I P r t Use the formula

11 000 9000 r 10 Substitute 11 000 90 000 r Simplify 11 000 r 90 000 0 12 r Mr Mogi borrowed the money at an annual rate of about 12 2 Divide both sides by 90 000

Summary
I P r t A

Interest Formula I Amount Formula A

SUMMARY SUMMARY

Principal How much was Time How it was borrowed for in Rate What was charged annual rate Amount to Payback Principal Interest Interest

I P r t