6-6 Simple Interest

Course 2

Warm UpWarm Up

Problem of the DayProblem of the Day

Lesson PresentationLesson Presentation

Warm UpMultiply.

1. 800 0.04 3

2. 1,700 2 0.25

3. 900 0.05 4

4. 1,200 6 0.35

96

850

180

Course 2

6-6 Simple Interest

2,520

Problem of the DayWhich number does not belong in the group?

0.75 75%

Course 2

6-6 Simple Interest

34

68

751,000

751,000

= ;340

the others equal . 34

Learn to solve problems involving simple interest.

Course 2

6-6 Simple Interest

Vocabulary

interestsimple interestprincipal

Insert Lesson Title Here

Course 2

6-6 Simple Interest

Course 2

6-6 Simple Interest

When you keep money in a savings account, your money earns interest.

Interest is an amount that is collected or paid for the use of money. For example, the bank pays you interest to use your money to conduct its business.

Likewise, when you borrow money from the bank, the bank collects interest on its loan to you.

Course 2

6-6 Simple Interest

One type of interest, called simple interest, is money paid only on the principal.

The principal is the amount of money deposited or borrowed.

To solve problems involving simple interest, you can use the following formula.

I = P · r · t

Interest

Principal

Rate of interest per year(as a decimal)

Time in years that themoney earns interest

Find the missing value.

Additional Example 1A: Using the Simple Interest Formula

Course 2

6-6 Simple Interest

A. I = , P = $575, r = 8%, t = 3 years

I = P · r · t

I = 575 · 0.08 · 3

I = $138

The simple interest is $138.00.

Substitute. Use 0.08 for 8%.

Multiply.

Find the missing value.

Additional Example 1B: Using the Simple Interest Formula

Course 2

6-6 Simple Interest

B. I = $204, P = $1,700, r = , t = 6 years

I = P · r · t

204 = 1,700 · r · 6

204 = 10,200r

20410,200

= 10,200r10,200

0.02 = r

The interest rate is 2%

Substitute.

Multiply.

Divide by 10,200 to isolate the variable.

Find the missing value.

Try This: Example 1A

Course 2

6-6 Simple Interest

A. I = , P = $525, r = 7%, t = 2 years

I = P · r · t

I = 525 · 0.07 · 2

I = $73.50

The simple interest is $73.50.

Substitute. Use 0.07 for 7%.

Multiply.

Find the missing value.

Try This: Example 1B

Course 2

6-6 Simple Interest

B. I = $600, P = $2,000, r = , t = 3 years

I = P · r · t

600 = 2,000 · r · 3

600 = 6,000r

6006000

= 6,000r6,000

0.1 = r

The interest rate is 10%

Substitute.

Multiply.

Divide by 10,200 to isolate the variable.

Lesson Quiz

Find each missing value.

1. I =

2. I = $18, P = $150, r =

3. I = $640, P =

4. I = $120, P = $600, r = 5% t =

6%

$240

Insert Lesson Title Here

$2,000

4 years

Course 2

6-6 Simple Interest

, P = $800, r = 10%, t = 3 years

, t = 2 years

, r = 4%, t = 8 years

WP: Simple interest