6.6 Simple/Compound interest

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Simple and Compound Interest

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Presentation transcript:

6.6 Simple/Compound interest Objective: The objective today is for the students to become familiar with how to find simple and compound interest. They will gain a real-life experience with interest problems.

Information Interest: money earned or paid. Principal: money deposited/borrowed Simple interest: money earned or paid on principal Balance: sum of principal and interest. Simple interest formula: I = Prt I = interest P = principal R = rate T = time

Find simple interest A $1000 bond earns 6% interest. What’s the interest after 4 years. Find the interest of P = $500, r = 7%, t = 4yrs

Find simple interest Find the interest of P = $2500, r = 3%, t = 7yrs Loan brother $400 and charge him 10%. Said he pay you in a year? Find payment of interest.

Compound Interest P = $600, r = 8.75%, t = 2yrs Compound interest: interest earned on principal and interest from previous year. To find compound interest. 1. Find simple interest balance. 2. Take answer and run simple interest again. 3. Repeat P = $600, r = 8.75%, t = 2yrs P = $1750, r = 2.3%, t = 2yrs

Compound interest – st P = $2200, r = 7%, t = 3yrs Use compound interest to tell me which account will have greater balance when matured Account A Account P = $150 P = $150 R = 3.25 R = 6.5% T = 3yrs T = 2yrs

Wrap-up Questions/Comments Problems: Objective: The objective today is for the students to become familiar with how to find simple and compound interest. They will gain a real-life experience with interest problems.