lesson 8-6 pages 358-360 simple interest lesson check 8-5
TRANSCRIPT
What you really need to know!
Simple interest is the extra amount of money paid or earned for the use of money. To find simple interest I, use the formula I = prt.
What you really need to know!
Principal p is the amount of money deposited or invested. Rate r is the annual interest rate written as a decimal. Time t is the amount of time the money is invested in years.
Example 1:
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?
I = prt
Example 1b:
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 30 months?
30 months = 2.5 years
Example 2:
Laura borrowed $2,000 from her credit union to buy a computer. The interest rate is 9% per year. How much interest will she pay if it takes 8 months to repay the loan?
8 months = 2/3 of a year
Example 3:
Alma charged a $30 handbag on her credit card with an interest rate 8%. If she has no other charges on the card, how much money would she owe after six months?
6 months = 1/2 of a year