Simple Interest

Hi Everyone,

Seems like most of you understood simple interest and you all did a great job when Ms. Poulos visited our class.

Just to refresh your memories here is what we covered in class today:

Simple Interest is money added onto the original amount saved (earned) or borrowed (charged).

Simple Interest Formula

I = prt

I (Interest) - The amount earned or the amount charged
p (Principal)- The amount borrowed or deposited
r (Rate) – Percent at which the interest is charged
t (Time)- In years or months

Calculating Simple Interest

How much money would you pay in interest if you borrowed $1,600 for 1 ½ years at 16% APR?

Convert the percent to a decimal.
16% = .16

I = prt
I = $1,600 x .16 x 1.5
I = $384

Now try these problems for homework. Do them in your notebooks or binders and bring them to tomorrow's class.

1. Kent put $8,500 into an 18 month CD. The interest rate is 3.25% How much money will Kent earn in interest?

2. Katie bought a new sports car for $28,500. She financed her car for 6 years at 6.75%APR. How much will she end up paying for interest on her car?

3. Cody bought a new truck for $25,000. He took out a loan for 5 ½ years with 7.75% APR. How much will Cody end up paying in interest?

4. Tia saved her $9,000 for 2 ½ years at 4.25% APR in a CD, to go on a month long vacation with her family. How much did she earn in interest?

Have a great night and I will see you in class tomorrow. Oh, and don't forget to bring a calculator to school if you can. Thanks!!