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Simple and Compound Interest

Simple and Compound Interest. COURSE 2 LESSON 9-7. (For help, go to Lessons 6-2.). Change each percent to a decimal. 1. 4% 2. 9% 3. 2.0% 4. 6.5% 5. 5.09% 6. 18.21%. 6-7. Simple and Compound Interest. COURSE 2 LESSON 9-7. Solutions 1. 4% 0.04. 0.04 2. 9% 0.09. 0.09

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Simple and Compound Interest

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  1. Simple and Compound Interest COURSE 2 LESSON 9-7 (For help, go to Lessons 6-2.) Change each percent to a decimal. 1. 4% 2. 9% 3. 2.0% 4. 6.5% 5. 5.09% 6. 18.21% 6-7

  2. Simple and Compound Interest COURSE 2 LESSON 9-7 Solutions 1. 4% 0.04. 0.04 2. 9% 0.09. 0.09 3. 2.0% 0.02.0 0.02 4. 6.5% 0.06.5 0.065 5. 5.09% 0.05.09 0.0509 6. 18.21% 0.18.21 0.1821 6-7

  3. Find the value of n. a. = b. = 18 15 n 5 1.5 4.5 n 2.7 Simple and Compound Interest COURSE 2 LESSON 9-7 n = 6 n = 0.9 6-7

  4. Write the formula. I = prt Substitute. Use 0.03 for 3%. Simplify. I = (500)(0.03)(4) = 60 Simple and Compound Interest COURSE 2 LESSON 9-7 Find the simple interest on $500 invested at a 3% annual interest rate for 4 years. The interest is $60. 6-7

  5. B = p(1 +r)t Write the formula. Substitute. Use 0.03 for 3%. = 500(1 + 0.03)4 Use a calculator to simplify the power. = 500(1.12550881) Round to the nearest cent. 562.75 Simple and Compound Interest COURSE 2 LESSON 9-7 You deposit $500 in a bank account that pays 3% interest compounded annually. What is your balance after 4 years? The balance after 4 years is $562.75 Check for Reasonableness The compound interest is $562.75 – $500, or about $62.75. Simple interest would be I = ($500)(0.03)(4), or $60. Since compound interest is greater, the answer is reasonable. 6-7

  6. Simple and Compound Interest COURSE 2 LESSON 9-7 Krista opened a savings account with $100. 1. Find the simple interest earned at a 6% annual rate for 5 years. 2. Find the balance at 6% interest compounded annually for 5 years. $30 $133.82 6-7

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