Download - Simple Interest
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Simple Interest
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is money added onto the original amount saved (earned) or borrowed (charged).
Simple Interest
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Simple Interest Formula
I (Interest) - The amount earned or the amount charged
p (Principal)- The amount borrowed or deposited
r (Rate) – Percent at which the interest is charged
t (Time)- In years or months
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Calculating Simple Interest
Convert the percent to a decimal.
16% = .16
How much money would you pay in interest if you borrowed $1,600 for 1 ½ years at 16% APR?
I = prt
I = $1,600 x .16 x 1.5
I = $384
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Shawnique bought a beautiful house for $350,000. Her loan was for 30 years at 6.5% APR. How
much money will she end up paying in interest?
6.5% = . 065
I = prt I = $350,000 x .065 x 30
I = $682,500
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Kent put $8,500 into an 18 month CD. The interest rate is 3.25% How much money will Kent
earn in interest?
3.25% = . 0325
I = prt I = $8,500 x .0325 x 1.5
I = $414.38
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Katie bought a new sports car for $28,500. She financed her car for 6 years at 6.75%APR. How much will she end up paying for interest on her
car?
6.75% = . 0675
I = prt I = $28,500 x .0675 x 6
I = $11,542.50
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Cody bought a new truck for $25,000. He took out a loan for 5 ½ years with 7.75% APR. How
much will Cody end up paying in interest?
7.75% = . 0775
I = prt I = $25,000 x .0775 x 5.5
I = $10,656.25
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Tia saved her $9,000 for 2 ½ years at 4.25% APR in a CD, to go on a month long vacation with her
family. How much did she earn in interest?
4.25% = . 0425
I = prt I = $9,000 x .0425 x 2.5
I = $956.25