8-6 Simple Interest

Indicator N8Develop and analyze algorithms for computing with percents and demonstrate fluency in use.

Pages 358-360

Why do people deposit money into banks?

What does a savings account and a loan from a bank have in common?

• Simple interest- the amount of money paid or earned for the use of money.– the amount of money a bank pays you for

you loaning them your money. – or the amount of money you pay a creditor

for borrowing money.

• Simple Interest formula I = prt– I = simple interest– p = principal (the money you invest or

put-in)– r = rate (the annual interest rate-

percent written as a decimal) – t = time (the amount of time the money

is invested-in years)

8-6 Simple Interest

Find the simple interest earned…Brandon found a bank offering a

certificate of deposit that pays 4% simple interest. He has $1,500 to invest. How much interest will he earn in 3 years? 30 months?

I = prt I = 1500(0.04)

(3)

I = 18030 months?

I = prt = 1500(0.04)

I = 150

Write the interest formula.

Plug-in the values for the variables.

Solve.

Write the interest formula.

Plug-in the values for the variables.

Convert the time to years! (2.5)

30 ÷ 12 =

Solve.

Write a sentence. Brandon will earn $180.00 in interest in 3 years. In 30 months, he will earn $150.00 in interest.

Find the simple interest paid…Laura borrowed $2000 from her credit

union to buy a computer. The interest rate is 9% per year. How much interest will she pay if it takes her 8 months to repay the loan? Including interest, how much will she pay for the computer?

Write the interest formula. I = prtPlug-in the values for the variables. I = 2000(9%)(8 mos)

Convert the % to decimal!

Convert the time to years! I = 2000(0.09)

(0.6)

Solve. I = 120Write a sentence.

Laura will pay $120.00 in interest in 8 months. In total, Laura will repay $2,120.00 for her computer.

Find total paid on a credit card…Alma charged a $30.00 handbag on her

credit card with an interest rate of 17%. If she has no other charges on the credit card, how much money will she owe after 6 months? Write the interest formula. I =

prtPlug-in the values for the variables. I = 30(17%)(6 mos)Convert the % to decimal!

Convert the time to years!I = 30(0.17)(0.5)

Solve. I = 2.55

Write a sentence.

In 6 months, Alma will pay $32.55 for the handbag.

Homework • Pg. 360

• #8-28 even only