# Calculating Simple Interest

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Calculating Simple Interest
7.RP.A3

P.O.D. 1) Jackie bought a coat that was originally priced at \$50 for 40% off. If the sales tax rate is 5%, what is the total amount that Jackie paid for the coat? 2) Andy’s cat weighs pounds and Kylie’s cat weighs pounds. Which cat weighs more? 3) What is 4% of \$5,000?

If you want to buy a house but you don’t have enough money saved up, how can you get the money to buy the house?

How do credit card companies make money?
How do banks make money?

When you need to borrow money, you are charged interest on the money you borrowed. What does it mean when you are charged interest?  If you have money saved in the bank, the bank pays you interest. What is happening to your money?

Principal- the amount of money deposited or borrowed.
Simple interest- the amount paid or earned for the use of money.

Elliott has \$580 in his savings account that pays 3% simple interest
Elliott has \$580 in his savings account that pays 3% simple interest. How much interest will he earn in a) 5 years b) 6 months If the money is in a savings account, is the interest money that Elliott is earning or money that he is paying? Let’s say that interest is paid on the money once a year and Elliott is not adding any money to the account. Since we are only doing simple interest today, we can also say that Elliott is only paid interest on the principal and not previous interest earned. What could we do to find the amount of interest earned for the two periods of time?

I = interest, p = principal, r = rate, t = time
I = prt I = interest, p = principal, r = rate, t = time

Anna’s parents borrow \$6,300 from the bank to buy a new car
Anna’s parents borrow \$6,300 from the bank to buy a new car. The interest rate is 6% per year. How much simple interest will they pay if they take 2 years to repay the loan?

Jacob’s dad bought new tires for \$900 using a credit card
Jacob’s dad bought new tires for \$900 using a credit card. His card has an interest rate of 19%. If he has no other charges on his card and does not pay off his balance at the end of the month, how much money will he owe after one month?

Complete the problems with a partner.
Guided Practice Complete the problems with a partner.

Find the simple interest earned to the nearest cent for each principal, interest rate and time.
1) \$640, 3%, 2 years 2) \$1200, 3.9%, 8 months 3) \$4500, 9%, 3.5 years \$290, 12.5%, 6 months

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