1. Simple and Compound Interest Formulas and Problems

2. Simple interest: I=prt
I = interest
p = principal: amount you start with
r = rate of interest
t= time in years

3. I = prt = 3000  0.05  1 = 150 You made $150 for the year.
If you invest $3,000 at 5% for one year, how much will you make for the year?
I = prt
= 3000  0.05  1
= 150
You made $150 for the year.

4. Compound interest formula:
A = p(1+r)t
A = balance p = principal
r = rate t = time in years

5. = 750(1.075)2.5 (use a calculator here!) = $898.63
Find the total amount in your account if you start with $750 at 7.5% interest for 2.5 years.
A = p(1+r)t
= 750( )2.5
= 750(1.075)2.5 (use a calculator here!)
= $898.63

6. How much should you invest at 7% to have $200 after 5 years?
A = p(1+r)t (Plug in what you know.)
200 = p(1.07)5 (get p alone, then use a calculator.)
142.60= p

7. If you put $100 in the bank at 4% interest and leave it until you are 60, how much money will you have?
A = p(1+r)t
= 100(1.04)46 (This assumes you are currently 14) =

8. What about a mutual fund that pays 10% interest?
A = p(1+r)t
= 100(1.10)46 =