 # Simple Interest. Definitions Principal--Money you put in. Interest--Money earned. Interest Rate--percentage. Balance=Principal + Interest.

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Simple Interest

Definitions Principal--Money you put in. Interest--Money earned. Interest Rate--percentage. Balance=Principal + Interest

Formula for Interest I= prt I =Interest p =Principal r =Interest rate (as a decimal) t =Time in years

Example 1 Find the interest earned on \$500 invested at 7% interest for 1 year. I = (500)(0.07)(1) I = \$35

Example 2 Find the interest earned on \$1200 invested at 6.25% interest for 3 years. I = (1200)(0.0625)(3) I = \$225

Example 3 Find the balance of an account where \$950 is invested at 7.5% interest for 8 years. I = (950)(0.075)(8) I = \$570 Balance = \$950 + \$570 = \$1520

Example 4 You deposit \$150 into a savings account that pays you 6% interest every year. How much interest will you receive in one year? I = (150)(0.06)(1) I = \$9 What is your balance? \$150 + \$9 = \$159

Sue deposits \$720 into an account that earns 6.5% interest per year. How much interest will she earn in 3 months? I = (720)(.065)(.25) I = \$11.70

Jim deposits \$225 into an account that earns 4.5% interest per year. How much interest will Jim have earned in 9 months? I = (225)(0.045)(5) I = \$50.63 Balance = \$225 + \$50.63= \$275.63

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