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Simple Interest examples: If you put $600 in a CD at a bank for 6 months at a simple annual rate of 4.9%, how much interest will you earn? How much money will you have in the account at the end of the 6 months?

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You have to borrow $850 to buy Christmas gifts at a simple interest rate of 12%. Find the maturity value of the loan in 90 days.

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Exact number of days in a year: 365 (or 366 in a leap year) Ordinary number of days in a year (for financial purposes): 360

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Ordinary # of days: 360 One month = 30 days

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Simple Interest Formulas I = Prt ( and then A = P + I ) A = P(1 + rt) ( and then I = A – P )

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Seniors leave for college in about 8 months. You have saved $7000 but you need $7650 for tuition. At what simple annual interest rate would you need to invest your money in order to have enough for tuition? (Round answer to the nearest hundredth.)

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Juniors have a little more time before starting college. If a universitys tuition is $10,000 but you only have $8000, how long would you have to leave your money in the bank with a simple annual interest rate of 8% for it to reach the cost of tuition?

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Suppose you wish to accumulate $4000 in the next 9 months and a bank currently pays 6.5% simple annual interest. How much money would you need to start with?

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Assignment: Study Guide #1 – 4 additional practice if needed p233 # 37 – 40, 42

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4/29/2015Section 8.31 Section 8.3 Compound Interest Objectives 1.Use the compound interest formulas. 2.Calculate present value. 3.Understand and compute.

4/29/2015Section 8.31 Section 8.3 Compound Interest Objectives 1.Use the compound interest formulas. 2.Calculate present value. 3.Understand and compute.

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