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6-6 Simple Interest Course 2

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

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

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**Insert Lesson Title Here**

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

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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. Rate of interest per year (as a decimal) Interest I = P · r · t Time in years that the money earns interest Principal

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**Additional Example 1A: Using the Simple Interest Formula**

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

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

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**Additional Example 1B: CORRECT IT!**

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

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**6-6 Simple Interest Try This: Example 1A Find the missing value.**

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

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**Try This: Example 1A: CORRECT IT!**

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

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**Understand the Problem**

Course 2 6-6 Simple Interest Insert Lesson Title Here 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? 1 Understand the Problem Rewrite the question as a statement: • Find the number of years it will take for Avery’s 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 Insert Lesson Title Here 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? 2 Make a Plan Avery’s 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.

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**Additional Example 2: Problem Solving Application**

Course 2 6-6 Simple Interest Additional Example 2: Problem Solving Application Solve 3 A = P + I Substitute. 6,800 = 6,000 + I –6,000 – 6,000 Subtract to isolate the variable. 800 = I I = P · r · t 800 = 6,000 · 0.04 · t Substitute. Use 0.04 for 4%. 800 = 240t Multiply. 800 240 = 240t Divide to isolate the variable. 3.33 t Round to the nearest hundredth. 1 3 It will take 3 years.

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**Additional Example 2: Problem Solving Application**

Course 2 6-6 Simple Interest Additional Example 2: Problem Solving Application 4 Look Back 1 3 After exactly 3 years, Avery’s money will have earned $800 in simple interest and his account balance will be $6,800. 1 3 I = 6,000 · 0.04 · 3 = 800 1 3 So it will take 3 years to reach $6,800.

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**Understand the Problem**

Course 2 6-6 Simple Interest Insert Lesson Title Here 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? 1 Understand the Problem Rewrite the question as a statement: • Find the number of years it will take for Linda’s 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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**Understand the Problem**

Course 2 6-6 Simple Interest Insert Lesson Title Here 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? 1 Understand the Problem Rewrite the question as a statement: • Find the number of years it will take for Linda’s 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 Insert Lesson Title Here 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? 2 Make a Plan Linda’s 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.

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**Try This: Example 2: DO THIS ALONE**

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

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**Try This: Example 2: DO THIS ALONE**

Course 2 6-6 Simple Interest Try This: Example 2: DO THIS ALONE Solve 3 A = P + I Substitute. 12,000 = 10,000 + I –10,000 –10,000 Subtract to isolate the variable. 2,000 = I I = P · r · t 2,000 = 10,000 · 0.08 · t Substitute. Use 0.08 for 8%. 2,000 = 800t Multiply. 2,000 800 = 800t Divide to isolate the variable. 2.5 = t 1 2 It will take 2 years.

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**6-6 Simple Interest Try This: Example 2 4 Look Back**

Course 2 6-6 Simple Interest Try This: Example 2 4 Look Back 1 2 After exactly 2 years, Linda’s money will have earned $2,000 in simple interest and her account balance will be $12,000. 1 2 I = 10,000 · 0.08 · 2 = 12,000 1 2 So it will take 2 years to reach $12,000.

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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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Simple Interest. Simple Interest – * the amount of money you must pay back for borrowing money from a bank or on a credit card or * the amount of money.

Simple Interest. Simple Interest – * the amount of money you must pay back for borrowing money from a bank or on a credit card or * the amount of money.

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