1. Simple Interest

2. When you put money in the bank, you gain interest on that money.
Example:
Jane puts $300 in the bank and it makes 2% interest 𝑥 300 =
So she makes $6.00 in interest
The money put in the bank - $300 is the PRINCIPAL
The 2% is the INTEREST RATE
The $6.00 is the INTEREST

3. Two kinds of interest Simple Interest and Compound Interest
Simple interest – interest paid on the principal only. It is paid out and not put back in the account.

4. Interest over time Example:
Jane puts $300 in the bank and it makes 2% interest 𝑥 300 =
So she makes $6.00 in interest. This is for 1 year.
How much will she make in interest over 10 years?
$6.00 x 10 = $60

5. Interest = Principal x rate x time I = Prt
Jane deposited $100 in her account. She makes an annual interest rate of 5% and she leaves it in the account for 8 years without making any more deposits. How much will she make in interest?
P = 100 r = .05 t = 8
(100)(.05)(8) = $40 in interest

6. I = Prt
Luisa deposited $2,000 in an account earning simple interest at an annual rate of 5%. She made no additional deposits and no withdrawals. When she closed the account, she had earned a total of $1,000 in interest. How long was the account open?
P r = .05 t = ? I = 1000
1000 = (2000)(.05)(x)
100x = 1000
x = 10 years