imple Interest

(Don’t write this slide – you will see it again) 1) You REALLY want to buy this car. It costs $15,000. You decide to get a five year loan with a 6.5% interest rate for $15,000. How much interest will you pay?

Before you can do the problem you must know these terms: Principle – Amount of loan Rate – Interest rate written as a decimal (divide it by 100) Time – However many years the loan is for. ***This must be measured in years.

Formula Interest = Principle * Rate * Time OR I = PRT

You REALLY want to buy this car. It costs $15,000. You decide to get a five year loan with a 6.5% interest rate for $15,000. How much interest will you pay? Step 1: Turn the percent into a decimal: 6.5% = _______ Step 2: I = PRT Principle(loan amount) x Rate(percent as decimal) x Time (years) I = 15,000 x ________ x 5 = _________

2)You go out and spend $ on your credit card for a flat screen plasma television. It takes you 2 years to get your credit card paid off. Your credit card has an interest rate of 18.5%. How much interest will you pay on your credit card? Step 1: Turn percent into decimal: 18.5% = _______ Step 2: Principle (loan amount) x rate (decimal) x time (years) = interest paid _________ x _______ x _______ = ______

3) You open a bank account. You put $ in your bank account. Your account earns 2% interest. After 7 years how much interest will your bank account earn? Step 1: Turn percent into decimal: 2% = _______ Step 2: I = PRT

Total Paid To figure out how much was paid in total you have to add the interest to the principle. Total Price = Principle + Interest Paid

4) You buy some furniture for your new house. The furniture costs $5,000. You get a loan for 36 months with an interest rate of 8.5%. How much will you pay for your furniture? Step 1: Turn percent into decimal: 8.5% = _______ Step 2: I = PRT * Step 3: Principle (loan amount) + interest paid = Total paid ____________ + _________ = ________