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CHAPTER NINE

CHAPTER NINE. Simple Interest. Section 9.1. Basics of Simple Interest. Simple Interest Formula. I = P∙R∙ T EX: Find the interest on a loan of $14,680 for 6 months at 9% simple interest. Maturity Value. … the amount that must be repaid when the loan is due. M = P + I

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CHAPTER NINE

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  1. CHAPTER NINE Simple Interest

  2. Section 9.1 Basics of Simple Interest

  3. Simple Interest Formula • I = P∙R∙ T • EX: Find the interest on a loan of $14,680 for 6 months at 9% simple interest.

  4. Maturity Value • … the amount that must be repaid when the loan is due. • M = P + I • EX: Find the maturity value of a loan of $25,000 at 9% simple interest for 8 months.

  5. Finding the # of days… • Use table on P 349 • Find the number of days… • From July 7 to November 7. • From August 25 to January 20 of the following year. • From March 14 to September 9.

  6. Find Exact and Ordinary Interest • If the time is given in DAYS… • For EXACT interest: • T = # of days in loan period 365 • For ORDINARY interest: • T = # of days in loan period 360

  7. Find the exact and ordinary interest for a 200 day loan of $19,500 at 9% simple interest. Then find the difference between the two interest amounts. • We will use Ordinary Interest unless specified otherwise!

  8. Due Date of a Note • Time is often given in Months • So the due date is after the given # of months have passed, but on the same day of the month. • Find the due date for a 6-month loan made on March 31.

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