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Simple Interest

Simple Interest. Simple Interest. is money added onto the original amount saved (earned) or borrowed (charged). Simple Interest Formula. I = prt/100. I (Interest) - The amount earned or the amount charged p (Principal)- The amount borrowed or deposited

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Simple Interest

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  1. Simple Interest

  2. Simple Interest is money added onto the original amount saved (earned) or borrowed (charged).

  3. Simple Interest Formula I = prt/100 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 or months

  4. How much money would you pay in interest if you borrowed $1,600 for 1 ½ years at 16% APR? Calculating Simple Interest I = prt/100 I = ($1,600 x 16 x 1.5)/100 I = $384

  5. Mary 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? I = prt/100 I =($350,000 x 6.5 x 30)/100 I = $682,500

  6. Kent put $8,500 into an 18 month CD. The interest rate is 3.25% How much money will Kent earn in interest? I = prt/100 I =($8,500 x 3.25 x 1.5)/100 I = $414.38

  7. 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? I = prt/100 I =($28,500 x 6.75 x 6)/100 I = $11,542.50

  8. When invested at an annual interest rate of 7% an account earned $581.00 of simple interest in one year. How much money was originally invested in the account? I = prt/100 581 =(P x 7 x 1)/100 581 = 7/100 P P = (581 x 100) /7 P = $8300

  9. 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? I = prt/100 I = ($25,000 x 7.75 x 5.5)/100 I = $10,656.25

  10. 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? I = prt/100 I = ($9,000 x 4.25 x 2.5)/100 I = $956.25

  11. . An investment earns 4.5% simple interest in one year. If the money is withdrawn before the year is up, the interest is prorated so that a proportional amount of the interest is paid out. If $2400 is invested, what is the total amount that can be withdrawn when the account is closed out after 2 months I = prt/100 I = ($2,400 x 4.5x2/12)/100 I = $18 A = P + I A = $2400 +18 A = $2418 • Interest paid by bank - Unknown • Principle (invested) • Time is 2 months • (divide by 12) • Multiply • Now, since the money is being withdrawn, add the interest to the principal.

  12. A savings account is set up so that the simple interest earned on the investment is moved into a separate account at the end of each year. If an investment of $7,000 accumulate $910 of interest in the account after 2 years, what was the annual simple interest rate on the savings account • Interest paid by bank • Principle (invested) • Rate is unknown • Time is 2 years • Divide • . I = prt/100 910 = (7,000)(2)R/100 910 = 14,000 R/100 R = 910/140 6.5% = R

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