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SIMPLE INTEREST PART 2

Simple Interest - Exploring the other formulae and Rate

Ayisha1225
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SIMPLE INTEREST PART 2

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  1. FORMULA TO FIND SIMPLE INTEREST PRINCIPAL INTEREST RATE TIME SIMPLE INTEREST = x x $ % per year years

  2. x x Rate Principal Time Simple Interest = 100 x P x R T S I or I = 100

  3. FORMULA TO FIND AMOUNT The amount of money borrowed The amount of money charged AMOUNT PRINCIPAL SIMPLE INTEREST = + $ $ $

  4. Simple Interest Principal + Amount = A = P + SI

  5. PRINCIPAL- The total amount of money borrowed.

  6. PRINCIPAL – can also mean the money you put in the bank to save and earn interest on.

  7. RATE: The PERCENTAGE(%) on the borrowed amount which you are required to pay yearly. It is shown in PERCENTAGE(%) % A lower interest rate (%) means It is not going to be a lot of money.

  8. TIME: The PERIOD given to repay the loan. 18 months 2 years 1 ½ or years 24 months 36 months 3 years 60 months ½ years 5 years 6 months

  9. Principal This is the amount of money you borrowed from the bank. Simple Interest This is the interest or extra money they charge you every year for borrowing that money. Amount : You have to pay back both amounts- Principal + Interest

  10. RECAP: SIMPLIFIED : Can you remember? Principal The sum of money borrowed, loaned or deposited Rate The rate of interest in percent(%) per annum (each year) The period of time YEARS to PAY Time Simple Interest The extra amount charge yearly on the loan taken. The PRINCIPAL added to the INTEREST (A = P + I) It is the amount of money paid or earned for the use of the money Amount

  11. FINDING SIMPLE INTEREST a) Calculate the interest (S.I.) paid on a loan of $6000(P) at the rate of 6% per annum for a per of 2 years (T). b) Calculate the amount to be repaid. Step 2: Write your formula and follow it. Step 1: Pull out the information given: Principal (P) = $6000 Rate (R) = 6% Time = 2 years T x R x P S I = 100 S I = x x 2 6 6000 = $720 100

  12. WHAT IS MONTHLY INSTALLMENT • MONTHLY INSTALLMENT: payments made each month. This is the (AMOUNT) paid in a number of months. • To find monthly installment: • Step 1: Take the Amount (Principal + Interest) • Step 2: ( Change years to months ( years x 12) • Step 3 : Divide (Amount ÷ No. of Months)

  13. Step 2: Find the Simple Interest. Write your formula and follow it. Mr. Chin borrowed $45000.00 at a rate of 10% for 3 years. Mr. Chin repaid the total amount in EQUAL monthly installment. How many did he pay each month? Step 1: Pull out the information given: Principal (P) = $45000 Rate (R) = 10% Time = 3 years T x R x P S I = 100 x 3 10 x 45000 S I = = $13500 100

  14. WHAT IS MONTHLY INSTALLMENT • MONTHLY INSTALLMENT: payments made each month. This is the (AMOUNT) paid in a number of months. • To find monthly installment: • Step 1: Take the Amount (Principal + Interest) • Step 2: ( Change years to months ( years x 12) • Step 3 : Divide (Amount ÷ No. of Months)

  15. Step 2: • Change the years to months by x 12 • Divide the amount by total years (as months) Step 3: Find the amount Write your formula and follow it. Finding Monthly Installment Step 1: Take the Amount (Principal + Interest) A = P + SI 13500 + 45000 A = Time = 3 years Number of years in months = 3 x 12 = 36 months A = 58500 58500 A = Money paid each month (monthly installment) = 58500 ÷ 36 = $1625 A = 58500

  16. OTHER FORMULAE • Principal= • Rate = • Time =

  17. FIND THE PRINCIPAL Peter took a loan from the bank for 3 years at an annual interest rate of 10%. After 3 years he had repaid the bank $1800 in interest. What was the initial sum of money that he had borrowed? Principal= Principal = $6000

  18. FIND INTEREST RATE May put $1000 in an account. The account earns $160 in simple interest in 4 years. What is the annual interest rate? Rate = Rate=

  19. FIND THE AMOUNT OF TIME • How long will it take an account with a principal of $800 to earn $240 interest if the annual interest rate is 6%? Time = Time=

  20. Try this Sum Mr. Leon placed $8000.00 in a fixed deposit which paid interest at a rate of 5% over a two- year period. a) How much interest was he paid over the two- year period? Ans:__________________________ b) How much money did he have at the end of the two year period? Ans:__________________________

  21. WHAT PERCENTAGE MEANS Remember- % means ÷ 100 means ÷ 100

  22. Exploring the Rate The rate is the percentage charges yearly on the loan (principal) that was borrowed. This is where the 100 under the vinculum in Simple Interest Formula comes from Rate of 5% means 5 ÷ 100 or • Remember “ %” means ÷ 100 • Remember the vinculum ( the line separating numerator and denominator) means ÷ This can be reduced

  23. Convert Rate in Simple interest

  24. Convert Rate in Simple Interest 1 3

  25. Convert Rate in Simple Interest 2 8

  26. Convert Rate in Simple Interest 2 3

  27. Convert Rate in Simple Interest 62 12

  28. Convert Rate in Simple Interest 8

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