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Simple Interest

Simple Interest. You just bought a quality used car from your Aunt for $3,000 . She agreed to let you make payments for 3 years with simple interest at 6 percent . After you have paid her back fully and on time, how much did the car actually cost? Do you think this is a good deal?.

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Simple Interest

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  1. Simple Interest

  2. You just bought a quality used car from your Aunt for $3,000. She agreed to let you make payments for 3 years with simple interest at 6 percent. After you have paid her back fully and on time, how much did the car actually cost? Do you think this is a good deal?

  3. Simple Interest The Simple Interest is… I=3000 X .06 X 3 $540 Total Amount of the Loan is...$3540 Is this a good deal?

  4. Simple Interest Name any items or purchases that usually requires a person to get a LOAN.

  5. Credit Card Rate Report Updated: 03-26-2012 • National Average 15.00% • Low Interest 10.40% • Balance Transfer 12.60% • Business 13.13% • Student 13.77% • Cash Back 14.45% • Airline 14.63% • Reward 14.83% • Instant Approval 15.49% • Bad Credit 23.64%

  6. Simple Interest You will learn how banks calculate the amount in dollars to be repaid, when money is borrowed. Otherwise known as…..

  7. Simple Interest I=PRT "P" is the Principal and is the amount you borrow. "R" is the Rate in percent. "T" is the Time in years.

  8. Simple Interest Interest paid on the initial investment (the principal) only.

  9. Simple Interest When banks use simple interest, they consider the principal, the interest rate, and the length of time of the loan.

  10. Simple Interest "P" How much is the principal? "R" What is the Rate? "T" What is the time?

  11. Simple Interest "P" $100 "R" 10% "T" 2 years

  12. Simple Interest What is the Total Amount Owed? $120

  13. Simple Interestpractice You get a loan for a boat in the amount of $7000 at 6% for 5 years.

  14. Simple Interest I=PRT "P" is $7000 "R" 6% (or .06) "T" 5 Years

  15. Simple Interestpractice I = 7000 X .06 X 5 I = $7000 at 6% for 5 years I = 420 X 5 I = $2100 Total Money Owed: $2100 + $7000 = $9100

  16. Simple Interestpractice You get a loan to move for the amount of $2500 at 4% for 6 months.

  17. Simple Interest I=PRT "P" is $2500 "R" 4% (or .04) "T" 6 months = ½ Year = .5

  18. Simple Interest I=2500 X .04 X .5 The Simple Interest is… $50 Total Amount of the Loan is...$2550

  19. Now You will practice. • Complete the following chart. • You will trade with the awesome person sitting next to youand check answers.

  20. Roll CallWhat is Simple Interest? Interest paid on the initial investment (the principal) only.

  21. What is…. I=PRT? "P" is the Principal and is the amount you borrow. "R" is the Rate in percent. "T" is the Time in years.

  22. After you figure out Simple Interest you will know if you can afford to pay for things such as……

  23. Additional Assignment • Find out from your parents personal bank what the current interest rates are for: • MORTGAGE • CAR LOAN • CD’s

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