6-7 Simple Interest

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Lesson PresentationLesson Presentation

Problem of the DayProblem of the Day

Lesson QuizzesLesson Quizzes

6-7 Simple Interest

Warm UpMultiply.

1. 800 0.04 3

2. 1,700 2 0.25

3. 900 0.05 4

4. 1,200 6 0.35

96

850

180

2,520

6-7 Simple Interest

Problem of the DayWhich number does not belong in the group?

0.75 75% 34

68

751,000

751,000

= ;340

the others equal . 34

6-7 Simple Interest

MA.7.A.1.2 Solve percent problems, including problems involving…simple interest…

Sunshine State Standards

6-7 Simple Interest

Vocabulary

interestsimple interestprincipal

6-7 Simple Interest

When you keep money in a savings account, your money earns interest. Interest is an amount that is charged for borrowing or using money, or an amount of money that is earned by saving money. For example, the bank pays you interest to use your money to conduct its business. Likewise, when you borrow money from the bank, the bank collects interest on its loan to you.

6-7 Simple Interest

One type of interest, called simple interest, is money paid only on the principal. The principal is the amount of money deposited or borrowed. To solve problems involving simple interest, you can use the following formula.

I = P · r · t

Interest

Principal

Rate of interest per year(as a decimal)

Time in years that themoney earns interest

6-7 Simple Interest

Find the missing value.

Additional Example 1A: Using the Simple Interest Formula

I = , P = $575, r = 8%, t = 3 years

I = P · r · t

I = 575 · 0.08 · 3

I = $138

The simple interest is $138.00.

Substitute. Use 0.08 for 8%.

Multiply.

6-7 Simple Interest

Find the missing value.

Additional Example 1B: Using the Simple Interest Formula

I = $204, P = $1,700, r = , t = 6 years

I = P · r · t

204 = 1,700 · r · 6

204 = 10,200r

20410,200

= 10,200r10,200

0.02 = r

The interest rate is 2%

Substitute.

Multiply.

Divide by 10,200 to isolate the variable.

?

6-7 Simple Interest

Find the missing value.

Check It Out: Example 1A

I = ; P = $5,000, r = 4%, t = 6 years

l = 5,000 0.04 6

= 1,200

?

6-7 Simple Interest

Find the missing value.

Check It Out: Example 1B

I = $600, P = $2,000, r = , t = 3 years

600 = 2,000 r 3

600 = 6,000 r

6006000

= 6,000r6,000

0.1 = r

10% = r

?

6-7 Simple Interest

Additional Example 2: Problem Solving Application

Avery deposits $6,000 in an account that earns 4% simple interest. How long will it take for his account balance to reach $6,800?

11 Understand the Problem

Rewrite the question as a statement:• Find the number of years it will take for Avery’s account to reach $6,800.

List the important information:• The principal is $6,000.• The interest rate is 4%.• His account balance will be $6,800.

6-7 Simple Interest

22 Make a Plan

Avery’s account balance A includes the principal plus the interest: A = P + I. Once you solve for I, you can use I = P · r · t to find the time.

Additional Example 2 Continued

6-7 Simple Interest

Solve33A = P + I

6,800 = 6,000 + I

800 = I

I = P · r · t800 = 6,000 · 0.04 · t800 = 240t

3.33 tIt will take 3

13 years.

Substitute.

Subtract to isolate the variable.

Substitute. Use 0.04 for 4%.Multiply.

Divide to isolate the variable.

Round to the nearest hundredth.

–6,000 – 6,000

800240

= 240t240

Additional Example 2 Continued

6-7 Simple Interest

Look Back44

After exactly 3 years, Avery’s money will have earned $800 in simple interest and his account balance will be $6,800.

13

I = 6,000 · 0.04 · 3 13

= 800

So it will take 3 years to reach $6,800.13

Additional Example 2 Continued

6-7 Simple Interest

Check It Out: Example 2

Linda deposits $10,000 in an account that earns 8% simple interest. How long will it take for the total amount in her account to reach $12,000?

A = P + l12,000 = 10,000 + l 2,000 = l l = P r t 2,000 = 10,000 · 0.08 · t 2,000 = 800 · t

6-7 Simple Interest

2,000 800

Check It Out: Example 2 Continued

= 800 . t 800

2.5 = t

It will take 2 years.12

6-7 Simple Interest

Standard Lesson Quiz

Lesson Quizzes

Lesson Quiz for Student Response Systems

6-7 Simple Interest

Lesson Quiz

Find each missing value.

1. I =

2. I = $18, P = $150, r =

3. I = $640, P =

4. I = $120, P = $600, r = 5% t =

6%

$240

$2,000

4 years

, P = $800, r = 10%, t = 3 years

, t = 2 years

, r = 4%, t = 8 years

5. Dennis deposits $6,000 in an account that earns 5.5% simple interest. How long will it take before the total amount is $8,000?

A little over 6 years

6-7 Simple Interest

1. Identify the missing value.

I = , P = $1000, r = 6%, t = 3 years

A. $180

B. $200

C. $220

D. $250

Lesson Quiz for Student Response Systems

6-7 Simple Interest

2. Identify the missing value.

I = $12, P = $120, r = , t = 1 year

A. 15%

B. 10%

C. 5%

D. 3%

Lesson Quiz for Student Response Systems

6-7 Simple Interest

3. Identify the missing value.

I = $520, P = , r = 5%, t = 8 years

A. $1600

B. $1500

C. $1300

D. $1000

Lesson Quiz for Student Response Systems

6-7 Simple Interest

4. Identify the missing value.

I = $140, P = $500, r = 7%, t =

A. 4 years

B. 5 years

C. 6 years

D. 7 years

Lesson Quiz for Student Response Systems

6-7 Simple Interest

5. Tony deposits $5,000 in an account that earns 6.5% simple interest. How long will it take before the total amount is $7,000?

A. a little over 9 years

B. a little over 8 years

C. a little over 7 years

D. a little over 6 years

Lesson Quiz for Student Response Systems