Simple Interest Day 2 Formula I = PRT.

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Presentation transcript:

Simple Interest Day 2 Formula I = PRT

I = PRT I = interest earned (amount of extra money the bank pays you or the amount of extra money that you owe) P = Principle amount invested or borrowed. R = Interest Rate usually given as a percent (must changed to decimal before plugging it into formula) T = Time (must be measured in years) or converted to years by dividing by 12 months

I = PRT Solve for one of variables: Review I = PRT Solve for one of variables: Solving for I Plug in numbers for P, R, & T. Then multiply Solving for other variables Plug in what you know. Multiply the numbers that are on same side then divide by that answer. (Draw your river)

1. With an annual interest rate of 6%, an account earned $180 1. With an annual interest rate of 6%, an account earned $180.00 of simple interest in one year. How much money was originally deposited in the account? Interest paid by bank Principle (invested) is unknown Rate changed to decimal Time is 1 year Multiply Divide I = PRT 180= P(.06)(1) 180 = .06P .06 .06 3,000 = P You originally deposited $3,000. That is the Principle!

You Try: I = PRT 581= P(.07)(2) 581 = .14P .14 .14 $4,150 =P 2. An account has an annual interest rate of 7% and earns $581.00 of simple interest in two years. How much money was originally deposited in account? I = PRT 581= P(.07)(2) 581 = .14P .14 .14 $4,150 =P Interest paid by bank Principle (invested) is unknown Rate changed to decimal Time is 2 years Multiply Divide You originally deposited $4,150. That is the Principle!

3. If a saving account of $7,000 accumulates $910 of interest in the account after 2 years, what was the annual simple interest rate on the savings account? Interest paid by bank Principle (invested) Rate is unknown Time is 2 years Regroup & Multiply Divide Change to % I = PRT 910= 7,000(R)(2) 910 = (7,000)(2)R 910 = 14,000 R 14,000 14,000 0.065 = R 6.5% = R The Interest Rate is 6.5%.

You Try: 4. If an investment of $2,000 accumulate $360 of interest in the account after 4 years, what was the annual simple interest rate on the savings account? I = PRT 360= 2,000(R)(4) 360 = (2,000)(4)R 360 = 8,000 R 8,000 8,000 0.045 = R 4.5% = R Interest paid by bank Principle (invested) Rate is unknown Time is 4 years Regroup & Multiply Divide Change to % The Interest Rate is 4.5%.

I=PRT 209= 1900(R)(6/12) 209=(1900)(1/2)R 209=950R 950 950 0.22 = R Challenge!!! You Try: 5. Sylvia got a 6-month loan of $1900. At the end of 6 months, she received a $209 simple interest. What rate of interest did the she pay? I=PRT 209= 1900(R)(6/12) 209=(1900)(1/2)R 209=950R 950 950 0.22 = R 22% = R Interest paid by bank Principle (invested) Rate is unknown Time is 6 months (divide by 12) Regroup & Multiply Divide Change to %

I=PRT 525= 5000(.07)(T) 525=350T 350 350 1.5 = T Interest paid by bank 6. Adelynn got car loan for $5000. The annual interest rate is 7%. When she was done paying off her loan she had paid $5,525. How long did it take to pay off her loan? 5525- 5000 = $525 in Interest I=PRT 525= 5000(.07)(T) 525=350T 350 350 1.5 = T Interest paid by bank Principle (invested) Rate is 7% Time is unknown Multiply Divide It took her 18 months or a year and a half to pay off her loan.

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