Simple Interest

Simple Interest – * the amount of money you must pay back for borrowing money from a bank or on a credit card or * the amount of money you earn for keeping money in a savings account

Interest = principal ● rate ● time I = p ● r ● t Principal (p) is the amount in the account or the amount of money you borrow Rate (r) is the % as a decimal Time (t) is the time in years or part of a year

$600 at 6 ¼ % for 4 years. Find the interest. I = p ● r ● t I = 600 ●.0625 ● 4 I = $150 p = $600r =.0625 t = 4 What’s the total of the principal and interest? $600 + $150 = $750

$10,000 at 13% for 6 months. Find the interest. I = p ● r ● t p = $10,000r =.13 t =.5 I = 10,000 ●.13 ●.5 I = $650 How much do you owe altogether? $10,000 + $650 = $10,650

If you deposit $1000 in a savings account which pays 3% simple interest and you leave it in the bank for 10 years, how much interest will you earn, and what will be the balance in your account at the end of 10 years? $1000 (.03) (10) = $ 300 interest $ $300 = $1300