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Simple Interest Day 2 Formula I = PRT

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I = PRT 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

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**I = PRT Solve for one of variables:**

Review 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)

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**1. With an annual interest rate of 6%, an account earned $180**

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? Interest paid by bank Principle (invested) is unknown Rate changed to decimal Time is 1 year Multiply Divide I = PRT 180= P(.06)(1) 180 = .06P 3,000 = P You originally deposited $3,000. That is the Principle!

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**You Try: I = PRT 581= P(.07)(2) 581 = .14P .14 .14 $4,150 =P**

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 originally deposited $4,150. That is the Principle!

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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? Interest paid by bank Principle (invested) Rate is unknown Time is 2 years Regroup & Multiply Divide Change to % I = PRT 910= 7,000(R)(2) 910 = (7,000)(2)R 910 = 14,000 R 14, ,000 0.065 = R 6.5% = R The Interest Rate is 6.5%.

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You Try: 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 8,000 0.045 = R 4.5% = R Interest paid by bank Principle (invested) Rate is unknown Time is 4 years Regroup & Multiply Divide Change to % The Interest Rate is 4.5%.

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**I=PRT 209= 1900(R)(6/12) 209=(1900)(1/2)R 209=950R 950 950 0.22 = R**

Challenge!!! You Try: 5. Sylvia got a 6-month loan of $ 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 0.22 = R 22% = R Interest paid by bank Principle (invested) Rate is unknown Time is 6 months (divide by 12) Regroup & Multiply Divide Change to %

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**I=PRT 525= 5000(.07)(T) 525=350T 350 350 1.5 = T Interest paid by bank**

6. Adelynn got car loan for $ 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? = $525 in Interest I=PRT 525= 5000(.07)(T) 525=350T 1.5 = T Interest paid by bank Principle (invested) Rate is 7% Time is unknown Multiply Divide It took her 18 months or a year and a half to pay off her loan.

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Practice

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