Download presentation

Presentation is loading. Please wait.

1
**Simple and Compound Interest**

Lesson 7.7 OBJ: To calculate interest earned and account balances

2
Simple Interest I = prt; where p is principal, r is the rate and t is the time in years. Interest – The amount earned or paid for the use of money. Principal – The amount of money borrowed or deposited. Simple Interest – The amount paid only on the principal Annual Interest Rate – The percent of the principal earned or paid per year.

3
Examples A $1000 bond earns 6% simple annual interest. What is the interest earned after 4 years? Find the simple interest earned on $500 after 5 years in a money market account paying 5%.

4
Balance (A) The amount of an account that earns simple interest is the sum of the interest and the principal. A = p + prt or A = p(1 + rt) You can use either formula to get the balance when calculating the balance after simple interest.

5
Examples Susan deposits $2000 into her savings account. What is her balance after she earns 7% simple interest for 6 years? Find the unknown amount A = ? p = $1000 r = 2.5% t = 2 years

6
**Examples A = $1424.50 p = ? r = 3.5% t = 6 months**

Remember time must be in years!!!

7
Compound Interest The interest that is earned on both the principal and any interest that has been previously earned. Formula A = p(1 + r)t Example – You deposit $1200 into an account that earns 3.8% interst compounded annually. Find the balance after 5 years.

8
Examples You deposit $1200 into an account that earns 3.8% interest compounded annually. Find the balance after 5 years. Max borrows $3500 for a new car. The loan has 6.7% interest that will be compounded annually. How much money will he owe after 36 months?

Similar presentations

OK

Simple and Compound Interest Unit 4 - Investing. Determining Simple Interest I = p * r * t Interest = Principle X Rate X Time ( in years)

Simple and Compound Interest Unit 4 - Investing. Determining Simple Interest I = p * r * t Interest = Principle X Rate X Time ( in years)

© 2017 SlidePlayer.com Inc.

All rights reserved.

Ads by Google

Export pdf to ppt online free Ppt on limits and derivatives ppt Ppt on natural and artificial satellites definition Ppt on first conditional sentences Ppt on self development books Ppt on nature of human resource management Ppt on number system for class 9 Ppt on varactor diode function Ppt on ethical hacking pdf Ppt on object-oriented programming language