1. Simple Interest

2. is money added onto the original amount saved (earned) or borrowed (charged).
Simple Interest

3. Simple Interest Formula
I = prt
I (Interest) - The amount earned or the amount charged
p (Principal)- The amount borrowed or deposited
r (Rate) – Percent at which the interest is charged
t (Time)- In years or months

4. Calculating Simple Interest
How much money would you pay in interest if you borrowed $1,600 for 1 ½ years at 16% APR?
Convert the percent to a decimal.
16% = .16
I = prt
I = $1,600 x .16 x 1.5
I = $384

5. Shawnique bought a beautiful house for $350,000
Shawnique bought a beautiful house for $350,000. Her loan was for 30 years at 6.5% APR. How much money will she end up paying in interest?
6.5% = . 065
I = prt
I = $350,000 x .065 x 30
I = $682,500

6. Kent put $8,500 into an 18 month CD. The interest rate is 3
Kent put $8,500 into an 18 month CD. The interest rate is 3.25% How much money will Kent earn in interest?
3.25% =
I = prt
I = $8,500 x x 1.5
I = $414.38

7. Katie bought a new sports car for $28,500
Katie bought a new sports car for $28,500. She financed her car for 6 years at 6.75%APR. How much will she end up paying for interest on her car?
6.75% =
I = prt
I = $28,500 x x 6
I = $11,542.50

8. Cody bought a new truck for $25,000
Cody bought a new truck for $25,000. He took out a loan for 5 ½ years with 7.75% APR. How much will Cody end up paying in interest?
7.75% =
I = prt
I = $25,000 x x 5.5
I = $10,656.25

9. Tia saved her $9,000 for 2 ½ years at 4
Tia saved her $9,000 for 2 ½ years at 4.25% APR in a CD, to go on a month long vacation with her family. How much did she earn in interest?
4.25% =
I = prt
I = $9,000 x x 2.5
I = $956.25