1. Simple Interest
6.7

2. Simple Interest
The money earned on a savings account or an investment.
It can also be money you pay for borrowing money.

3. Simple Interest
I = Interest (the money paid or earned for the use of money)
P=Principal (the amount of money deposited or borrowed)
r= annual interest rate (as a decimal)
T= time (years…if in months put the number of months over 12)

4. Finding Interest Earned
Blake puts $500 in a savings account. The account earns 3% simple interest per year. What is the interest earned after 3 years?
P= $500
R= 3%= 0.03
T= 3 years
I=PRT
I=(500)(0.03)(3)
I=$45

5. Finding the Balance
Blake puts $500 in a savings account. The account earns 3% simple interest per year. What is the balance after 3 years?
Balance= Principal + Interest Balance = Balance = $545 after 3 years

6. Finding Annual Interest Rate
You put $700 in an account. The account earns $224 simple interest in 8 years. What is the annual interest rate?
P= $700
I= $224
R= x
T= 8 years
I=PRT
224 = 700(r)8
224 = 5600(r)
5600
= r
Rate = 4%

7. Finding Amount of Time P= $800 R= 2%= 0.02 T= x I= $100 I=PRT16
6.25 =T
Time = 6.25 years
A bank offers 3 savings accounts. The simple interest rate is determined by the principal. How long does it take an account with a principal of $800 to earn $100 in interest?
Less than $500
1.5%
$500-$5000 2%
More than $5000 3%

8. Finding an amount Paid on a Loan
You borrow $300 to buy a guitar. The simple interest rate is 12%. You pay off the loan after 4 years. How Much do you pay for the loan?
Principal + Interest $300 + I Find Interest: I=PRT I= 300(0.12)(4) I= $144 $300 + $144 Total Paid on Loan = $444

9. The Rich Get Richer
Imagine you win a $5 million lottery. If you deposit that money for 10 years at 6% simple interest how much will you have at the end of 10 years?
P= 5,000,000 R=0.06 T= 10 I=PRT I=(5,000,000)(0.06)(10) I=$3,000,000 How much do you have in your account? 5,000,000 +3,000,000 =$8,000,000

10. Homework
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