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Click the mouse button or press the Space Bar to display the answers.
Objective
Solve problems involving simple interest
Vocabulary
Interest
The amount of money paid or earned for the use of money
Vocabulary
Principal
The amount of money invested or borrowed
Example 1 Find Simple Interest
Example 2 Find the Total Amount
Example 3 Find the Interest Rate
Find the simple interest for $2,000 invested at 5.5% for 4 years.
Write the simple interest formula.
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Replace p with amount invested I = 2,000
Replace r with rate which is in %I = 2,000 5.5%
Replace t with time in years
I = 2,000 5.5% 4
Use calculator to solve
Find the simple interest for $2,000 invested at 5.5% for 4 years.
Enter 2,000
Answer: I = $440
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I = 2,000I = 2,000 5.5%I = 2,000 5.5% 4
2,000 5.5 4
Enter multiplication sign
Enter 5.5Enter %
%Enter multiplication sign
Enter 4Enter =
=
I = 440
Add dimensional analysis
I = $440
Find the simple interest for $1,500 invested at 5% for 3 years.
Answer: I = $225
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Find the total amount of money in an account where $80 is invested at 6% for 6 months.
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Total Amount = Interest + principle
Find the total amount of money
Write the interest formula
Replace p with amount investedI = 80
Replace r with rate which is %
I = 80 5.5%
Replace t with time in years
I = 80 5.5%
Time is given in months and must have years so put over denominator of 12 (12 months in a year)
612
Find the total amount of money in an account where $80 is invested at 6% for 6 months.
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Solve using a calculator
Find the total amount of money
I = 80 I = 80 5.5% I = 80 5.5% 612
I = $2.40
Remember: Must find total amount by adding the interest to the principle
Total = Principle + Interest Replace principle with 80
Total = 80 Replace interest with 2.40Total = 80 + 2.40AddTotal = 82.40Add dimensional analysis
Total = $82.40
Answer: Total = $82.40
Answer:
Find the total amount of money in an account where $60 is invested at 8% for 3 months.
Total = $61.20
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LOANS Gerardo borrowed $4,500 from his bank for home improvements. He will pay $1,260 interest for the next four years. Find the simple interest rate of the loan.
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Write the simple interest formula.
Replace I with interest paid1,260 Replace p with amount borrowed
1,260 = 4,500
Define the variable for the rate
Find the simple interest rate
1,260 = 4,500 r
Replace t with time in years
1,260 = 4,500 r 4
Combine “like” terms
Commutative Property of Multiplication allows changing order when multiplying
4,500 r 4
1,260 = 18,000 r
LOANS Gerardo borrowed $4,500 from his bank for home improvements. He will pay $1,260 interest for the next four years. Find the simple interest rate of the loan.
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Ask “what is being done to the variable?”
1,260 1,260 = 4,500
Find the simple interest rate
1,260 = 4,500 r 1,260 = 4,500 r 4 4,500 r 4
1,260 = 18,000 rThe variable is being multiplied by 18,000
Do the inverse on both sides of the equal sign
LOANS Gerardo borrowed $4,500 from his bank for home improvements. He will pay $1,260 interest for the next four years. Find the simple interest rate of the loan.
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Bring down 1,260 = 18,000 r
1,260 1,260 = 4,500
Find the simple interest rate
1,260 = 4,500 r 1,260 = 4,500 r 4 4,500 r 4
1,260 = 18,000 r
1,260 = 18,000 r
Using the fraction bar, divide both sides by 18,000
18,000 18,000
Combine “like” terms
0.070.07 = 1 r
Use Identify Property to multiply 1 r
0.07 = r
LOANS Gerardo borrowed $4,500 from his bank for home improvements. He will pay $1,260 interest for the next four years. Find the simple interest rate of the loan.
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Find the simple interest rate
1,260 = 4,500 r 4
1,260 = 18,000 r
1,260 = 18,000 r18,000 18,000
7% = rate
0.07 = 1 r0.07 = r
Remember: Rate is a % so multiply by 100 and add % sign
Answer:
LOANS Jocelyn borrowed $3,600 from her bank for home improvements. She will repay the loan by paying $90 a month for the next five years. Find the simple interest rate of the loan.
Answer: Rate = 10%
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