Download - Simple Interest
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Simple Interest
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You just bought a quality used car from your Aunt for $3,000. She agreed to let you make payments for 3 years with simple interest at 6 percent. After you have paid her back fully and on time, how much did the car actually cost?
Do you think this is a good deal?
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Simple Interest
I=3000 X .06 X 3The Simple Interest is…
$540
Total Amount of the Loan is...$3540
Is this a good deal?
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Name any items or purchases that usually requires a person to get a LOAN.
Simple Interest
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Credit Card Rate ReportUpdated: 03-26-2012
• National Average 15.00% • Low Interest 10.40% • Balance Transfer 12.60% • Business 13.13% • Student 13.77% • Cash Back 14.45% • Airline 14.63% • Reward 14.83% • Instant Approval 15.49% • Bad Credit 23.64%
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Simple Interest
You will learn how banks calculate the amount in dollars to be repaid, when money is borrowed.
Otherwise known as…..
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Simple Interest
I=PRT"P" is the Principal and is the amount you borrow.
"R" is the Rate in percent.
"T" is the Time in years.
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Simple Interest
Interest paid on the initial investment (the principal) only.
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Simple Interest
When banks use simple interest, they consider the principal, the interest rate, and the length of time of the loan.
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Simple Interest
"P" How much is the principal?
"R" What is the Rate?
"T" What is the time?
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Simple Interest
"P" $100
"R" 10%
"T" 2 years
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Simple Interest
What is the Total Amount Owed?
$120
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Simple Interestpractice
You get a loan for a boat in the amount of $7000
at 6% for 5 years.
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Simple Interest
I=PRT"P" is $7000
"R" 6% (or .06)
"T" 5 Years
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Simple Interestpractice
I = $7000 at 6% for 5 yearsI = 7000 X .06 X 5I = 420 X 5I = $2100
Total Money Owed: $2100 + $7000 = $9100
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Simple Interestpractice
You get a loan to move for the amount of $2500
at 4% for 6 months.
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Simple Interest
I=PRT"P" is $2500
"R" 4% (or .04)
"T" 6 months = ½ Year = .5
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Simple Interest
I=2500 X .04 X .5 The Simple Interest is…
$50
Total Amount of the Loan is...$2550
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Now You will practice.
• Complete the following chart.• You will trade with the awesome person
sitting next to you and check answers.
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Roll CallWhat is Simple Interest?
Interest paid on the initial investment (the principal) only.
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What is….
I=PRT?"P" is the Principal and is the amount you borrow.
"R" is the Rate in percent.
"T" is the Time in years.
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After you figure out Simple Interest you will know if you can afford to pay for
things such as……
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Additional Assignment• Find out from your parents
personal bank what the current interest rates are for:• MORTGAGE• CAR LOAN• CD’s