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6-6 Simple Interest Course 2

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Learn to solve problems involving simple interest. Course 2 6-6 Simple Interest

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Vocabulary interest simple interest principal Insert Lesson Title Here Course 2 6-6 Simple Interest

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Course 2 6-6 Simple Interest When you keep money in a savings account, your money earns interest. Interest For example, the bank pays you interest to use your money to conduct its business. Likewise, when you borrow money from the bank, the bank collects interest on its loan to you.

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Course 2 6-6 Simple Interest One type of interest, called simple interest, is money paid only on the principal. The principal is the amount of money deposited or borrowed. To solve problems involving simple interest, you can use the following formula. I = P · r · t Interest Principal Rate of interest per year (as a decimal) Time in years that the money earns interest

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Find the missing value. Additional Example 1A: Using the Simple Interest Formula Course 2 6-6 Simple Interest A. I =, P = $575, r = 8%, t = 3 years I = P · r · t I = 575 · 0.08 · 3 I = $138 The simple interest is $138.00. Substitute. Use 0.08 for 8%. Multiply.

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Find the missing value. Additional Example 1B: YOU TRY! (Do the problem alone, showing your work (what you put in the calculator) Course 2 6-6 Simple Interest B. I = $204, P = $1,700, r =, t = 6 years I = P · r · t The interest rate is _______ %

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Find the missing value. Additional Example 1B: CORRECT IT! Course 2 6-6 Simple Interest B. I = $204, P = $1,700, r =, t = 6 years I = P · r · t 204 = 1,700 · r · 6 204 = 10,200r 204 10,200 = 10,200r 10,200 0.02 = r The interest rate is 2% Substitute. Multiply. Divide by 10,200 to isolate the variable.

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Find the missing value. Try This: Example 1A Course 2 6-6 Simple Interest A. I =, P = $525, r = 7%, t = 2 years The simple interest is $

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Find the missing value. Try This: Example 1A: CORRECT IT! Course 2 6-6 Simple Interest A. I =, P = $525, r = 7%, t = 2 years I = P · r · t I = 525 · 0.07 · 2 I = $73.50 The simple interest is $73.50. Substitute. Use 0.07 for 7%. Multiply.

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Additional Example 2: Problem Solving Application Avery deposits $6,000 in an account that earns 4% simple interest. How long will it take for his account balance to reach $6,800? Insert Lesson Title Here Course 2 6-6 Simple Interest 1 Understand the Problem Rewrite the question as a statement: Find the number of years it will take for Averys account to reach $6,800. List the important information: The principal is $6,000. The interest rate is 4%. His account balance will be $6,800.

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Insert Lesson Title Here Course 2 6-6 Simple Interest 2 Make a Plan Averys account balance A includes the principal plus the interest: A = P + I. Once you solve for I, you can use I = P · r · t to find the time. Additional Example 2: Problem Solving Application Avery deposits $6,000 in an account that earns 4% simple interest. How long will it take for his account balance to reach $6,800?

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Course 2 6-6 Simple Interest Solve 3 A = P + I 6,800 = 6,000 + I 800 = I I = P · r · t 800 = 6,000 · 0.04 · t 800 = 240t 3.33 t It will take 3 1313 years. Substitute. Subtract to isolate the variable. Substitute. Use 0.04 for 4%. Multiply. Divide to isolate the variable. Round to the nearest hundredth. Additional Example 2: Problem Solving Application –6,000 – 6,000 800 240 = 240t 240

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Course 2 6-6 Simple Interest Look Back 4 After exactly 3 years, Averys money will have earned $800 in simple interest and his account balance will be $6,800. 1313 I = 6,000 · 0.04 · 3 1313 = 800 So it will take 3 years to reach $6,800. 1313 Additional Example 2: Problem Solving Application

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Try This: Example 2: DO THIS ALONE Linda deposits $10,000 in an account that earns 8% simple interest. How long will it take for the total amount in her account to reach $12,000? Insert Lesson Title Here Course 2 6-6 Simple Interest 1 Understand the Problem Rewrite the question as a statement: Find the number of years it will take for Lindas account to reach $12,000. List the important information: The principal is: _______ The interest rate is ______ Her account balance will be ________

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Try This: Example 2: DO THIS ALONE Linda deposits $10,000 in an account that earns 8% simple interest. How long will it take for the total amount in her account to reach $12,000? Insert Lesson Title Here Course 2 6-6 Simple Interest 1 Understand the Problem Rewrite the question as a statement: Find the number of years it will take for Lindas account to reach $12,000. List the important information: The principal is $10,000. The interest rate is 8%. Her account balance will be $12,000.

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Insert Lesson Title Here Course 2 6-6 Simple Interest 2 Make a Plan Lindas account balance A includes the principal plus the interest: A = P + I. Once you solve for I, you can use I = P · r · t to find the time. Try This: Example 2 Linda deposits $10,000 in an account that earns 8% simple interest. How long will it take for the total amount in her account to reach $12,000?

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Course 2 6-6 Simple Interest Solve 3 A = P + I 12,000 = 10,000 + I 2,000 = I I = P · r · t It will take ____years. Substitute. Subtract to isolate the variable. Substitute. Use 0.08 for 8%. –10,000 Try This: Example 2: DO THIS ALONE

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Course 2 6-6 Simple Interest Solve 3 A = P + I 12,000 = 10,000 + I 2,000 = I I = P · r · t 2,000 = 10,000 · 0.08 · t 2,000 = 800t 2.5 = t It will take 2 1212 years. Substitute. Subtract to isolate the variable. Substitute. Use 0.08 for 8%. Multiply. Divide to isolate the variable. –10,000 Try This: Example 2: DO THIS ALONE 2,000 800 = 800t 800

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Course 2 6-6 Simple Interest Look Back 4 After exactly 2 years, Lindas money will have earned $2,000 in simple interest and her account balance will be $12,000. 1212 I = 10,000 · 0.08 · 2 1212 = 12,000 So it will take 2 years to reach $12,000. 1212 Try This: Example 2

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This lesson is over…. Make sure you understand every example and vocabulary word in the lesson. There is an extra/optional video you can watch on the class site. Use your notes to complete activity F. This will be similar to a mini lesson quiz to make sure you know how to compute simple interest problems.

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