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Example 6-4b Objective Solve problems involving simple interest

Example 6-4b Vocabulary Simple interest The amount paid or earned for the use of money The formula for simple interest is: Interest = Principle  Rate  Time I = prt Note: Time must be in years

Example 6-4b Vocabulary Principal The amount of money deposited or invested

Lesson 6 Contents Example 1Find Interest Earned Example 2Find Interest Earned Example 3Find Interest Paid on a Loan Example 4Find Total Paid on a Credit Card

Example 6-1a SAVINGS Brandon found a bank offering a certificate of deposit that pays 4% simple interest. He has $1,500 to invest. How much interest will he earn in 3 years? Write formula for interest Replace principle with $1,500 Multiply Answer: I = $180 1/4 Replace rate with 4% which needs changed to a decimal Replace time with 3 years Add dimensional analysis

Example 6-1b SAVINGS Cheryl opens a savings account that pays 5% simple interest. She deposits $600. How much interest will she earn in 2 years? Answer: I = $60 1/4

Example 6-2a SAVINGS Brandon found a bank offering a certificate of deposit that pays 4% simple interest. He has $1,500 to invest. How much interest will he earn in 30 months? Answer: I = $150 Multiply Write formula for interest Replace principle is $1,500 Replace rate is 4% which needs changed to a decimal Replace time is 30 months which needs to be changed to years (simply put a denominator of 12) 2/4 30 Add dimensional analysis

Example 6-2b SAVINGS Micah opens a savings account that pays 3.5% simple interest. He deposits $2,000. How much interest will he earn in 42 months? Answer: I = $245 2/4

Example 6-3a LOANS Laura borrowed $2,000 from her credit union to buy a computer. The interest rate is 9% per year. How much interest will she pay if it takes 8 months to repay the loan? Answer: I = $120 Write formula for interest 3/4 Replace principle is $2,000 Replace rate is 9% which needs changed to a decimal Replace time is 8 months which needs to be changed to years (simply put a denominator of 12) Multiply Add dimensional analysis

Example 6-3b LOANS Juan borrowed $7,500 from the bank to purchase a used car. The interest rate is 15% per year. How much interest will he pay if it takes 2 years to repay the loan? Answer: I = $2,250 3/4

Example 6-4a CREDIT CARDS Alma charged a $30 handbag on her credit card with an interest rate of 8%. If she has no other charges on the card, how much money would she owe after six months? Must find how much money Alma would owe after 6 months which means principle + interest 4/4 First, find how much interest will be charged Write formula for interest

Example 6-4a CREDIT CARDS Alma charged a $30 handbag on her credit card with an interest rate of 8%. If she has no other charges on the card, how much money would she owe after six months? 4/4 Replace principle is $30 Replace rate is 8% which needs changed to a decimal Replace time is 6 months which needs to be changed to years (simply put a denominator of 12) 6 Multiply I = $1.20

Example 6-4a CREDIT CARDS Alma charged a $30 handbag on her credit card with an interest rate of 8%. If she has no other charges on the card, how much money would she owe after six months? 4/4 Add interest to principle to find total 6 I = $1.20 Total cost = principle + interest Total cost = $30 + $1.20 Principle is $30 Interest is $1.20 Total cost = $31.20 Answer:

Example 6-4b CREDIT CARDS Curtis charged a $60 power tool on his credit card with an interest rate of 19%. If he has no other charges on the card, how much money would he owe after nine months? Answer: Total cost = $68.55 * 4/4

End of Lesson 6 Assignment Lesson 8:6Simple Interest All