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Simple Interest for Students

The document explains how to calculate simple interest using the formula: Interest = Principal x Rate x Time. It provides examples of calculating simple interest for different scenarios involving borrowing or investing principal amounts at given interest rates for periods of time. The examples illustrate how to determine the interest earned or owed as well as the total balance after applying the interest.

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Jayr Watabe
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56 views8 pages

Simple Interest for Students

The document explains how to calculate simple interest using the formula: Interest = Principal x Rate x Time. It provides examples of calculating simple interest for different scenarios involving borrowing or investing principal amounts at given interest rates for periods of time. The examples illustrate how to determine the interest earned or owed as well as the total balance after applying the interest.

Uploaded by

Jayr Watabe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Lesson 9.

7: Simple Interest

ALCOS: 3, 5, 6
Objective: Students will use the simple
interest formula to calculate simple
interests.
If someone borrows money, what factors influence
how much is paid back?

Principal -How much was borrowed.


Time - How long it was borrowed for.
(in years)
Rate - What interest was charged.
(annual % rate)

Amount to Payback = Principal + Interest


Interest = Principal  Rate  Time
I  P r  t
Joe borrows $200 from the bank at 6% simple
interest for 3 years. What interest does he owe,
and what is his total balance (amount to payback)
P  200
r  6%  0.06
t3
Interest Balance
I  P r  t Balance = P + I
I  (200)(0.06)(3) Balance = 200 + 36
I  36 Balance = 236
Interest owed  $36 Balance = $236
Juan invests $5000 in bonds for 6 months at an
annual interest rate of 7%. How much interest
did he earn, and what is the balance in his account
P  5000
r  7%  0.07
t  6 months  0.5 years
Interest Balance
I  P r  t Balance = P + I
I  (5000)(0.07)(0.5) Balance = 5000 + 175
I  175 Balance = 5175

Interest owed  $175 Balance = $5175


Find the simple interest and the balance.
1) $2000 at 4% for 9 mos.
P  2000
r  4%  0.04
t  9 mos.  0.75 yrs.
I  P r  t
I  (2000)(0.04)(0.75)
I  $60

Balance = P + I
Balance = 2000 + 60
Balance = $2060
Find the annual simple interest rate.
1) $2000 earns $420 simple interest over 3 years.
P  2000
I  420
t  3 years
I  P r  t
420  (2000)(r)(3)
420  6000r
6000 6000
0.07  r
Annual Interest Rate  7%
Find the annual simple interest rate.
2) $625 simple interest is earned on a 2 year loan
of $5000. P  5000
I  625
t  2 years
I  P r  t
625  (5000)(r) (2)
625  10,000r
10,000 10,000
0.0625  r
r  6.25% or 6 %1
4
Find the principal amount invested.
1
3) Interest of $1650 is earned over 4 years at 5 %.
2
I  1650
t  4 years
r  5.5%  0.055
I  P r  t
1650  (P)(0.055)(4)
1650  0.22P
0.22 0.22
7500  P
Principal  $7500

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