11/7/11
DESCRIPTION
11/7/11. Bellringer: What do you know about interest (the money kind)?. Simple Interest. http://www.youtube.com/watch?v=iQSDO20sL4w. Simple Interest. is money added onto the original amount saved (earned) or borrowed (charged). Simple Interest Formula. I = prt. - PowerPoint PPT PresentationTRANSCRIPT
11/7/11
• Bellringer:– What do you know about interest (the money
kind)?
Simple Interest
http://www.youtube.com/watch?v=iQSDO20sL4w
is money added onto the original amount saved (earned) or borrowed (charged).
Simple Interest
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 (if given in months, put it over 12)
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
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
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
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
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
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
Joe borrows $200 from the bank at 6% simpleJoe borrows $200 from the bank at 6% simpleinterest for 3 years. What interest does he owe,interest for 3 years. What interest does he owe,
and what is his total balance (amount to payback)?and what is his total balance (amount to payback)?
Interest Balance
I P r t I (200)(0.06)(3)
I 36
Interest owed $36
Balance = P + I
Balance = 200 + 36Balance = 236
Balance = $236
P 200r 6% 0.06t 3
Worksheet
• Do problems 1-8
11/8/11
• Get out your homework.
• Bellringer: 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?
Homework Answers1. Interest= $204 5. Interest= $43.75
Total= $1004 Total= $1793.75
2. Interest= $37.50 6. Interest= $360
Total= $287.50 Total= $2360
3. Interest= $72 7. Interest= $1250
Total= $972 Total= $6250
4. Interest= $125 8. Interest= $450
Total= $1375 Total= $6450
Juan invests $5000 in bonds for 6 months at anJuan invests $5000 in bonds for 6 months at anannual interest rate of 7%. How much interestannual interest rate of 7%. How much interest
did he earn, and what is the balance in his account?did he earn, and what is the balance in his account?
Interest Balance
I P r t I (5000)(0.07)(0.5)
I 175
Interest owed $175
Balance = P + I
Balance = 5000 + 175Balance = 5175
Balance = $5175
P 5000r 7% 0.07t 6 months 0.5 years
Find the simple interest and the balance.Find the simple interest and the balance.
1) $2000 at 4% for 9 mos.
P 2000r 4% 0.04t 9 mos. 0.75 yrs.
I P r t I (2000)(0.04)(0.75)I $60
Balance = P + I
Balance = 2000 + 60Balance = $2060
Find the annual simple interest rate.Find the annual simple interest rate.1) $2000 earns $420 simple interest over 3 years.
P 2000I 420t 3 years
I P r t 420 (2000)(r)(3)420 6000r
Annual Interest Rate 7%
6000 60000.07 r
Find the annual simple interest rate.Find the annual simple interest rate.2) $625 simple interest is earned on a 2 year loan of $5000. P 5000
I 625t 2 years
I P r t 625 (5000)(r)(2)625 10,000r
r 6.25%
10,000 10,0000.0625 r
1or 6 %4
Find the principal amount invested.Find the principal amount invested.13) Interest of $1650 is earned over 4 years at 5 %.2
I 1650t 4 yearsr 5.5%
I P r t 1650 (P)(0.055)(4)1650 0.22P
Principal $7500
0.22 0.227500 P
0.055
Quick Draw for Points
• You will have 60 seconds to solve each problem
• This is your exit ticket. Fold your piece of paper so you have 4 boxes.
To buy a car, Jessica borrowed $15,000 for 3 years at an annual simple interest rate of 9%. How much interest will she pay if she pays the entire loan off at the end of the third year?
Example 1: Finding Interest on a Loan
First, find the interest she will pay.
I = P r t Use the formula.
I = 15,000 0.09 3 Substitute. Use 0.09 for 9%.
I = 4050 Solve for I.
Example 1A: Finding Total Payment on a Loan
What is the total amount that she will repay?
Jessica will pay $4050 in interest.
P + I = A principal + interest = total amount
15,000 + 4050 = A Substitute.
19,050 = A Solve for A.
You can find the total amount A to be repaid on a loan by adding the principal P to the interest I.
Jessica will repay a total of $19,050 on her loan.
Example 2
I = P r t Use the formula.
200 = 4000 0.02 t Substitute values into the equation.
2.5 = t Solve for t.
TJ invested $4000 in a bond at a yearly rate of 2%. He earned $200 in interest. How long was
the money invested?
200 = 80t
The money was invested for 2.5 years, or 2 years and 6 months.
I = P r t Use the formula.
I = 1000 0.075 50 Substitute. Use 0.075 for 7.5%.
I = 3750 Solve for I.
The interest is $3750. Now you can find the total.
Example 3
Bertha deposited $1000 into a retirement account when she was 18. How much will
Bertha have in this account after 50 years at a yearly simple interest rate of 7.5%?
P + I = A Use the formula.
1000 + 3750 = A Substitute.
4750 = A Solve for A.
Bertha will have $4750 in the account after 50 years.
Example 3 Continued
Mr. Mogi borrowed $9000 for 10 years to make home improvements. If he repaid a total of $20,000 at what interest rate did he borrow
the money?
Example 4
P + I = A Use the formula.
9000 + I = 20,000 Substitute.
I = 20,000 – 9000 = 11,000 Subtract 9000 from both sides.
He paid $11,000 in interest. Use the amount of interest to find the interest rate.
Example 4 Continued
11,000 = 90,000 r Simplify.
I = P r t Use the formula.
11,000 = 9000 r 10 Substitute.
11,000 90,000
= r Divide both sides by 90,000.
0.12 = r
Mr. Mogi borrowed the money at an annual rate of about 12.2%.
Summary
• I = __________• P=__________• r = __________• t = __________
• Interest Formula: I = ( )( )( )• Balance Formula: A = ___ + ___
Part 2 on worksheet
11/9/11Bellringer: Fill in the blanks.
• I = __________• P=__________• r = __________• t = __________
• Interest Formula: I = ( )( )( )• Balance Formula: A = ___ + ___
Homework answers:
1. 350*0.05*4= $70
2. 180=1500*0.04*t t=3 years
3. 650+195= $355
4. 82.50+1000= $1082.50
5. 96=800*r*4 r=3%
6. 139.50=930*0.06*t t=2.5
Word problem
• Read the problem, underline what you don’t know.
• When you are finished, write in 25 words or less how you did the problem.
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