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Simple Interest

Simple Interest. Percent. What is it? How do we find it?. Interest. Amount of money the bank pays you for putting your money into that bank They use your money to make more money!! To figure: use your multiplying skills!!. Simple Interest. Interest paid once during the “term”

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Simple Interest

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  1. Simple Interest

  2. Percent • What is it? • How do we find it?

  3. Interest • Amount of money the bank pays you for putting your money into that bank • They use your money to make more money!! • To figure: use your multiplying skills!!

  4. Simple Interest • Interest paid once during the “term” • Term is the amount of time that the money is invested • If it’s for multiple years, the interest is added once a year • Rate: the percent that the interest is earned at • Principal: initial investment of money • Interest: amount of money made during the investment term

  5. Example 1 • A $5000 certificate of deposit (called a CD) pays 12% simple interest. How much interest will it pay over a 4-year period? • How much money will you get if you cash it in after the four years?

  6. Example 2 • Mr. Henderson holds a $500 CWLP bond that pays $32.50 each year. What is the simple rate of interest on the bond?

  7. Example 3 • $500 is deposited in an account that pays simple interest. Find the amount of interest earned in one year if the rate of interest is: • 4% • 5 ½ % • 8.75%

  8. Example 4 • $1500 is deposited in an account. Find the rate of simple interest paid if the amount in the account one year later is: • $1584 • $1601.25

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