Lesson 7.6 Concept: How to find simple interest Guidelines: When you compute simple interest for a time that is less than 1year, write the time as a fraction of a year. The simple interest can be calculated by using the formula…. I = Prt Interest = Principal rate time

Months represented as part of a year. 1 month = 0.08 of a year 2 months = 0.17 of a year 3 months = 0.25 of a year 4 months = 0.33 of a year 5 months = 0.42 of a year 6 months = 0.50 of a year 7 months = 0.58 of a year 8 months = 0.67 of a year 9 months = 0.75 of a year 10 months = 0.83 of a year 11 months = 0.91 of a year 12 months = 1 year

I = Prt (Interest = Principal rate time) You have $650 in a savings account. The annual interest is 5%. How much interest would you earn in 6 months? Substitute. Write % as a decimal, and write months as a decimal. I = 650(0.05)(0.5) Multiply I = X.025 $16.25

I = Prt (Interest = Principal rate time) You borrow $5000 for a personal loan to buy furniture. The annual interest rate is 15%. What is the simple interest you will pay in one year? Substitute. Write % as a decimal, and write months as a decimal. I = 5000(0.15)(1) Multiply I = X.015 $750

Solve with different variables You invest $500 and earn $15 in interest in 9 months. What is the rate? I = Prt 15 = 500r = 500r x = 375r ) Rate is 0.04 or 4%

What is the interest rate on a simple interest loan when the principal is $6000 and the interest is $1800 over 4 years? I = Prt Interest = Principal rate time

Principal $350 Rate 25% Time 3 months