Vocabulary Principal: An amount of money borrowed or loaned. Interest: A charge for the use of money, paid by the borrower to the lender. Annual Percentage.

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Presentation transcript:

Vocabulary Principal: An amount of money borrowed or loaned. Interest: A charge for the use of money, paid by the borrower to the lender. Annual Percentage Rate (APR): Interest rate that is charged per year.

How do you calculate Simple Interest? Interest = Principal × Rate × Time I= P r t

Example 1: Simple Interest Suppose you invest $500 for 3 years at a simple interest rate of 5% per year. How much interest will you gain after 3 years? I = Prt I = ($500 )(5% )(3) I = ($500) (.05)(3) I = $75 “I” represents the interest “P” represents the principal “r” represents the interest rate per year “t” represents the time in years

Example 2: Total Find the total amount that you will have at the end of the 3 years. Total= P + ITotal = $500 + $75 Total = $575 “T” represents the total “P” represents the principal “I” represents the interest

Example 3: Simple Interest Alex invest $5000 for 2 years at a simple interest rate of 9% per year. Find the amount of interest. I = PrtI= (5000)(.09)(2) p=$5000I=$900 r=9% t=2 I=?

Example 4: Total Find the total amount at the end of the 2 years. Total=P + ITotal= $ I=$900Total= $5900 P=$5000 Total=?

1.) Chris invest $300 for 6 months at a simple interest rate of 12% per year. Find the amount of interest and the total amount. ***Before we can solve this, we have to convert 6 months into years! 6 = 12 t I=Prt 6/12 = t I = (300)(0.12)(0.5) t = ½ = 0.5I = $18  Total = $318

2.) Ryan invests $870 for 3 years at a simple interest rate of 6% per year. Find the amount of interest and the total amount.

3.) Megan borrowed $12, 000 for 3 months at a simple interest rate of 6.75% per year. Find the amount of interest and the total amount.

4.) Haley invested $1000 for 2 years at a simple interest rate of 8.25% per year. Find the amount of interest and the total amount.

5.) Jacob invests $850 at a simple interest rate of 5.5% per year for 5 years. Find the amount of interest and the total amount.

6.) Carrington invests $15,000 for 8 years at a simple interest rate of 6.75% per year. Find the amount of interest and the total amount.