Percent and Problem Solving : Interest Section 7.6 Percent and Problem Solving : Interest

Simple Interest I = P * R * T I = Simple Interest, amount you owe P = Principal, how much you borrow R = Rate, percentage agreed upon T = Time, number of years to pay it back

Other Formulas Total Amount = Principal + interest Month payments = Total Amount / 12(Time)

Example A company borrows $162,500 for 5 years at a simple interest rate of 12.5%. Find the interest paid on the loan and the total amount paid back.

Example If you purchased a $800,000 home, find the monthly payments if you have a simple interest rate of 8.5% and a 30 year mortgage.

Compound Interest Formula The total amount A is an account given by where P is the principal, r is the interest rate written as a decimal, t is the length of time in years, and n is the number of times compounded per year.

Example Find the total amount if the principal is $6150 and it is compounded semiannually at a rate of 14% for 15 years.

Example Find the total amount if the principal is $2000 and it is compounded quarterly at a rate of 8% for 5 years.

Example Find the total amount if the principal is $2000 and it is compounded daily at a rate of 8% for 5 years.