Transcript Chapter 8 Lesson 6

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Chapter 8
Lesson 6
Simple Interest
Objective: Solve problems
involving simple interest
Charlotte plans to invest $1,000 in a certificate of
deposit (CD). Below shows CD rates for one year
at various banks.
State Credit Union: 2.25%
First Federal Bank: 3.1%
Mountain Savings Bank: 2.65%
Valley Bank: 3.25%
Find the amount of money that Charlotte can
earn in one year from the State Credit
union.
$22.50
Interest
The amount of money that one earns on a
CD for example.
Where else do we earn interest on our
money?
Simple Interest
The amount paid or earned for the use of
money.
To find the simple interest:
I = prt
p: the principal: the amount of money
deposited or invested
r: annual interest rate written as a decimal
t: amount of time that money is invested or
borrowed (in YEARS)
Today’s concepts
• Finding the interest earned
• Finding the interest paid on a loan
• Find the total paid on a credit card
FIRST
FIND THE INTEREST EARNED
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?
Formula for simple interest
Replace p with $1,500, r with 0.04,
and t with 3.
Simplify.
Answer: Brandon will earn $180 in interest
in 3 years.
SAVINGS Cheryl opens a savings account that pays
5% simple interest. She deposits $600. How much
interest will she earn in 2 years?
Answer: $60
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?
Write the time as years.
Formula for simple interest
Simplify.
Answer: Brandon will earn $150 in interest in 30
months.
SAVINGS Micah opens a savings account that pays
4% simple interest. He deposits $2,000. How much
interest will he earn in 42 months?
Answer: $280
Second
Find the interest paid on a loan
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?
Formula for simple interest
Replace p with $2,000, r with
0.09, and
Simplify.
Answer: Laura will pay $120 in interest in 8 months.
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: $2,250
THIRD
Find the total paid on a credit
card
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?
Formula for simple interest
Replace p with $30, r with 0.08,
and t with 0.5.
Simplify.
Answer: The interest owed after six months is
$1.20. So, the total amount owed would
be $30 + $1.20 or $31.20.
CREDIT CARDS Curtis charged a $60 power tool on
his credit card with an interest rate of 9%. If he has no
other charges on the card, how much money would
he owe after nine months?
Answer: $64.05
Textbook Work
• Page 360 numbers 8 – 18 even
Homework
• Sheet 8-2 odd numbers only
• Chapter 8 test Friday