11 7 11 Bellringer What do you know

11/7/11 • Bellringer: – What do you know about interest (the money kind)?

Simple Interest

http: //www. youtube. com/watch? v=i. QSDO 20 s L 4 w

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

Simple Interest Formula 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 (if given in months, put it over 12)

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

Shawnique bought a beautiful house for $350, 000. Her loan was for 30 years at 6. 5% APR. How much money will she end up paying in interest? 6. 5% =. 065 I = prt I = $350, 000 x. 065 x 30 I = $682, 500

Kent put $8, 500 into an 18 month CD. The interest rate is 3. 25% How much money will Kent earn in interest? 3. 25% =. 0325 I = prt I = $8, 500 x. 0325 x 1. 5 I = $414. 38

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? 6. 75% =. 0675 I = prt I = $28, 500 x. 0675 x 6 I = $11, 542. 50

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? 7. 75% =. 0775 I = prt I = $25, 000 x. 0775 x 5. 5 I = $10, 656. 25

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? 4. 25% =. 0425 I = prt I = $9, 000 x. 0425 x 2. 5 I = $956. 25

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)? Interest Balance = P + I Balance = 200 + 36 Balance = 236 Balance = $236

Worksheet • Do problems 1 -8

11/8/11 • Get out your homework. • Bellringer: 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?

Homework Answers 1. Interest= $204 Total= $1004 5. Interest= $43. 75 Total= $1793. 75 2. Interest= $37. 50 Total= $287. 50 6. Interest= $360 Total= $2360 3. Interest= $72 Total= $972 7. Interest= $1250 Total= $6250 4. Interest= $125 Total= $1375 8. Interest= $450 Total= $6450

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? Interest Balance = P + I Balance = 5000 + 175 Balance = 5175 Balance = $5175

Find the simple interest and the balance. Balance = P + I Balance = 2000 + 60 Balance = $2060

Find the annual simple interest rate.

Find the principal amount invested.

Quick Draw for Points • You will have 60 seconds to solve each problem • This is your exit ticket. Fold your piece of paper so you have 4 boxes.

Example 1: Finding Interest on a Loan To buy a car, Jessica borrowed $15, 000 for 3 years at an annual simple interest rate of 9%. How much interest will she pay if she pays the entire loan off at the end of the third year? First, find the interest she will pay. I=P I = 15, 000 r t 0. 09 I = 4050 Use the formula. 3 Substitute. Use 0. 09 for 9%. Solve for I.

Example 1 A: Finding Total Payment on a Loan What is the total amount that she will repay? You can find the total amount A to be repaid on a loan by adding the principal P to the interest I. Jessica will pay $4050 in interest. P+I=A principal + interest = total amount 15, 000 + 4050 = A Substitute. 19, 050 = A Solve for A. Jessica will repay a total of $19, 050 on her loan.

Example 2 TJ invested $4000 in a bond at a yearly rate of 2%. He earned $200 in interest. How long was the money invested? I=P 200 = 4000 r t 0. 02 Use the formula. t 200 = 80 t 2. 5 = t Substitute values into the equation. Solve for t. The money was invested for 2. 5 years, or 2 years and 6 months.

Example 3 Bertha deposited $1000 into a retirement account when she was 18. How much will Bertha have in this account after 50 years at a yearly simple interest rate of 7. 5%? I=P I = 1000 r t 0. 075 I = 3750 Use the formula. 50 Substitute. Use 0. 075 for 7. 5%. Solve for I. The interest is $3750. Now you can find the total.

Example 3 Continued P+I=A Use the formula. 1000 + 3750 = A 4750 = A Substitute. Solve for A. Bertha will have $4750 in the account after 50 years.

Example 4 Mr. Mogi borrowed $9000 for 10 years to make home improvements. If he repaid a total of $20, 000 at what interest rate did he borrow the money? P+I=A Use the formula. 9000 + I = 20, 000 Substitute. I = 20, 000 – 9000 = 11, 000 Subtract 9000 from both sides. He paid $11, 000 in interest. Use the amount of interest to find the interest rate.

Example 4 Continued I=P r 11, 000 = 9000 t Use the formula. r 10 Substitute. 11, 000 = 90, 000 11, 000 =r 90, 000 r Simplify. Divide both sides by 90, 000. 0. 12 = r Mr. Mogi borrowed the money at an annual rate of about 12. 2%.

Summary • • I = _____ P=_____ r = _____ t = _____ • Interest Formula: I = ( )( )( ) • Balance Formula: A = ___ + ___

Part 2 on worksheet

11/9/11 Bellringer: Fill in the blanks. • • I = _____ P=_____ r = _____ t = _____ • Interest Formula: I = ( )( )( ) • Balance Formula: A = ___ + ___

Homework answers: 1. 2. 3. 4. 5. 6. 350*0. 05*4= $70 180=1500*0. 04*t t=3 years 650+195= $355 82. 50+1000= $1082. 50 96=800*r*4 r=3% 139. 50=930*0. 06*t t=2. 5

Word problem • Read the problem, underline what you don’t know. • When you are finished, write in 25 words or less how you did the problem.

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? 7. 75% =. 0775 I = prt I = $25, 000 x. 0775 x 5. 5 I = $10, 656. 25