2. Main Idea and New Vocabulary Example 1: Find Interest Earned
Example 3: Find Interest Paid on a Loan
Example 4: Find Total Paid on a Credit Card
Lesson Menu

3. Solve problems involving simple interest.
principal
simple interest
Main Idea/Vocabulary

4. I = prt Formula for simple interest
Find Interest Earned
FINANCIAL LITERACY Jose’s savings account pays 3.25% interest. He has $1,200 in his account. How much interest will he earn in 3 years?
I = prt Formula for simple interest
I = 1,200   3 Replace p with $1,200, r with , and t with 5.
I = 117 Simplify.
Answer: Jose will earn $117 in interest in 3 years.
Example 1

5. CERTIFICATE OF DEPOSIT Perry has a Certificate of Deposit (CD) that pays 4.9% interest. He started the CD with $1,000. The CD will mature in 1 year. How much interest will he have earned after one year?
A. $4,900
B. $490
C. $49
D. $4.90
Example 1 CYP

6. 9 months = or 0.75 year. Write the time as years.
Find Interest Earned
FINANCIAL LITERACY Jose’s savings account pays 3.25% interest. He has $1,200 in his account. How much interest will he earn in 9 months?
9 months = or 0.75 year. Write the time as years.
I = prt Formula for simple interest
I = 1,200   0.75 Replace p with $1,200, r with , and t with 0.75.
Example 2

7. Answer: Jose will earn $29.25 in interest in 9 months.
Find Interest Earned
I = Simplify.
Answer: Jose will earn $29.25 in interest in 9 months.
Example 2

8. MONEY MARKET Debbie has a money market savings account that pays 4
MONEY MARKET Debbie has a money market savings account that pays 4.25% interest. She has $900 in her account. How much interest will she earn in 9 months?
A. $193.24
B. $38.25
C. $28.69
D. $27.00
Example 2 CYP

9. Find Interest Paid on a Loan
LOANS Phoebe borrowed $2,600 from a bank to help pay for her college tuition. The interest rate is 8% per year. How much simple interest will she pay if it takes her 5 years to repay the loan?
I = prt Formula for simple interest
I = 2,600  0.08  5 Replace p with $2,600, r with 0.08, and t with 5.
I = 1,040 Simplify.
Answer: Phoebe will pay $1,040 in interest in 2 years.
Example 3

10. AUTO LOAN Autumn borrowed $4,100 from a bank to help pay for a car
AUTO LOAN Autumn borrowed $4,100 from a bank to help pay for a car. The interest rate is 7.5% per year. How much simple interest will she pay if it takes her 6 years to repay the loan?
A. $18,450
B. $1,845
C. $630
D. $307.50
Example 3 CYP

11. Find Total Paid on a Credit Card
CREDIT CARDS Mariano paid for a plane ticket that cost $365 using a credit card. His card has an interest rate of 13.5%. If he has no other charges on his card and does not pay off his balance by the end of the month, how much money will he owe after one month?
I = prt Formula for simple interest
I = 365   Replace p with $365, r with 0.135, and t with
Example 4

12. Find Total Paid on a Credit Card
I = 4.11 Simplify.
The interest owed after one month is $4.11.
Answer: So, the total amount owed would be $365 + $4.11 or $
Example 4

13. CREDIT CARDS Fred paid for a new TV that cost $1,065 using a credit card. His card has an interest rate of 12.9%. If he has no other charges on his card and does not pay off his balance by the end of the month, how much money will he owe after one month?
A. $82.56
B. $137.39
C. $1,076.45
D. $1,147.60
Example 4 CYP