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Simple Interest Day 2 Formula I = PRT.  I = interest earned (amount of extra money the bank pays you or the amount of extra money that you owe)  P =

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Presentation on theme: "Simple Interest Day 2 Formula I = PRT.  I = interest earned (amount of extra money the bank pays you or the amount of extra money that you owe)  P ="— Presentation transcript:

1 Simple Interest Day 2 Formula I = PRT

2  I = interest earned (amount of extra money the bank pays you or the amount of extra money that you owe)  P = Principle amount invested or borrowed.  R = Interest Rate usually given as a percent (must changed to decimal before plugging it into formula)  T = Time (must be measured in years) or converted to years by dividing by 12 months

3 I = PRT Solve for one of variables:  Solving for I  Plug in numbers for P, R, & T.  Then multiply  Solving for other variables  Plug in what you know.  Multiply the numbers that are on same side then divide by that answer. (Draw your river) Review

4 1. With an annual interest rate of 6%, an account earned $ of simple interest in one year. How much money was originally deposited in the account?  I = PRT  180= P(.06)(1)  180 =.06P ,000 = P  Interest paid by bank  Principle (invested) is unknown  Rate changed to decimal  Time is 1 year  Multiply  Divide You originally deposited $3,000. That is the Principle!

5 2. An account has an annual interest rate of 7% and earns $ of simple interest in two years. How much money was originally deposited in account?  I = PRT  581= P(.07)(2)  581 =.14P $4,150 =P  Interest paid by bank  Principle (invested) is unknown  Rate changed to decimal  Time is 2 years  Multiply  Divide You Try: You originally deposited $4,150. That is the Principle!

6 3. If a saving account of $7,000 accumulates $910 of interest in the account after 2 years, what was the annual simple interest rate on the savings account?  I = PRT  910= 7,000(R)(2)  910 = (7,000)(2)R  910 = 14,000 R 14,000 14, = R 6.5% = R  Interest paid by bank  Principle (invested)  Rate is unknown  Time is 2 years  Regroup & Multiply  Divide  Change to % The Interest Rate is 6.5%.

7 4. If an investment of $2,000 accumulate $360 of interest in the account after 4 years, what was the annual simple interest rate on the savings account?  I = PRT  360= 2,000(R)(4)  360 = (2,000)(4)R  360 = 8,000 R 8,000 8, = R 4.5% = R  Interest paid by bank  Principle (invested)  Rate is unknown  Time is 4 years  Regroup & Multiply  Divide  Change to % You Try: The Interest Rate is 4.5%.

8 5. Sylvia got a 6-month loan of $1900. At the end of 6 months, she received a $209 simple interest. What rate of interest did the she pay?  I=PRT 209= 1900(R)(6/12) 209=(1900)(1/2)R 209=950R = R 22% = R  Interest paid by bank  Principle (invested)  Rate is unknown  Time is 6 months (divide by 12)  Regroup & Multiply  Divide  Change to % Challenge!!! You Try:

9 6. Adelynn got car loan for $5000. The annual interest rate is 7%. When she was done paying off her loan she had paid $5,525. How long did it take to pay off her loan?  I=PRT 525= 5000(.07)(T) 525=350T = T  Interest paid by bank  Principle (invested)  Rate is 7%  Time is unknown  Multiply  Divide = $525 in Interest It took her 18 months or a year and a half to pay off her loan.

10 Practice


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