Simple Interest

​Simple Interest

7th Math Module 2​

​Simple Interest

I = P x R x T

When in real life do we have interest with our money?​

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​Simple Interest

I = P x R x T

I= Interest earned

P= Principal: money borrowed or deposited (Starting amount)

R= Rate: Always in decimal form (7%= .07)

T= Time: Always in years (5 years = 5 or 6 months=0.5 years)​

Multiple Choice

If you borrow money for 8 months, what do you use for your formula?

• 8

• 8/12

• 0.6

• 1.5

​Simple Interest Example

​Savings Account

​Maggie put $580 into a savings account. The account pays 2.5% simple interest each year. If she neither adds or withdraws money from the account, how much interest will she earn after two years?

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Multiple Choice

Carrie invests $430 into a savings account. The account pays 3% simple interest on an annual basis. If she does not add or withdraw money, how much interest will she earn after 18 months?

WHAT EQUATIONS WORKS FOR THIS PROBLEM?

• I= 430 X 3 X 18

• I = 430 X .03 X 18

• I = 430 X .3 X 1.5

• I = 430 X .03 X 1.5

Multiple Choice

Rodell’s parents are starting a real estate business. They borrow $99,400 from the bank to finance their start-up operations. The simple interest rate is 4.75% per year, and they plan to take 15 years to repay the loan.

Which equation works for finding the interest on their loan?

• I = 99400 x .0475 x 15

• I = 99400 x 4.75 x 15

• I = 99400 x .475 x 1.25

• I = 99400 x .0475 x 1.25