1. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
Use your classmates as subjects and estimate these percents.
a. About what percent are girls?
b. About what percent are twins?
Check students’ answers.
7-8

2. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
(For help, go to Lesson 6-6.)
Find each amount.
1. 6% of $ % of $2,000
3. 4.5% of $ % of $325 1 2
Check Skills You’ll Need
7-8

3. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
6(400) = 100x (2000) = 100x
$24 = x $1,100 = x
4.5(700) = 100x (325) = 100x
$ = x $17.88 = x
Solutions 6
100 x
400 = 55
100 x
2000 = x
100 =
6(400) =
100x
100
55(2000)
4.5
100 x
700 =
5.5
100 x
325 =
100x
100 =
4.5(700)
100x
100 =
5.5(325)
7-8

4. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
Suppose you deposit $1,000 in a savings account that earns 6% per year.
a.  Find the interest earned in two years. Find the total of principal plus interest.
I = prt
Use the simple interest formula.
I = 1,000 • 0.06 • 2
Replace p with 1,000, r with 0.06, and t with 2.
I = 120
Simplify.
total = 1, = 1,120
Find the total.
The account will earn $120 in two years. The total of principal plus interest will be $1,120.
7-8

5. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
(continued)
b.  Find the interest earned in six months. Find the total of principal plus interest.
Write the months as part of a year.
t = = = 0.5 1 2 6 12
I = prt
Use the simple interest formula.
I = 1,000 • 0.06 • 0.5
Replace p with 1,000, r with 0.06, and t with 0.5.
I = 30
Simplify.
Total = 1, = 1,030
Find the total.
The account will earn $30 in six months. The total of principal plus interest will be $1,030.
Quick Check
7-8

6. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
Quick Check
You deposit $400 in an account that earns 5% interest compounded annually (once per year). The balance after the first four years is $ What is the balance in your account after another 4 years, a total of 8 years? Round to the nearest cent.
Principal at
Beginning of Year
Interest Balance
Year 5 : $ • 0.05 = =
Year 6 : $ • =
Year 7 : $ • =
Year 8 : $ • =
After the next four years, for a total of 8 years, the balance is $
7-8

7. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
Find the balance on a deposit of $2,500 that earns 3% interest compounded semiannually for 4 years.
The interest rate r for compounding semiannually is 0.03 ÷ 2, or The number of payment periods n is 4 years  2 interest periods
per year, or 8.
B = p(1 + r)n
Use the compound interest formula.
B = 2,500( )8  
Replace p with 2,500, r with 0.015, and n with 8.
Use a calculator. Round to the nearest cent.
B 2,816.23
The balance is $2,
Quick Check
7-8

8. Simple and Compound Interest
PRE-ALGEBRA LESSON 7-8
Find the simple interest and the balance.
1. $1,200 at 5.5% for 2 years 2. $2,500 at 8% for 6 months
3. Find the balance on a deposit of $1,200, earning 9.5% interest compounded semiannually for 10 years.
$132; $1,332
$100; $2,600
$3,035.72
7-8