3.6 Simple Interest Formula

​Title: 3.5 Simple Interest

EQ: What is the simple interest formula? And what does each letter represent

Some text here about the topic of discussion

Simple Interest

I= Interest earned

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

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

T= Time: Always in years
EX. 5 years = 5
6 months=0.5 years

Multiple Choice

If you are calculating the simple interest and you are given the time in months, how can you find the time in years?

• Add 12 to the months

• divide the months by 12

• multiply 12 times the months

• You cannot change it to months.

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

Multiple Choice

Frank has earned $387 in interest over the past 36 months in his account. If the bank has a 1% interest rate, how much was the principal?

• $12,900

• $1,290

• $129,00

Multiple Choice

The simple interest formula is I=Prt.  The P represents the principal.  The principal is ___________________.  

• the amount of money borrowed or deposited

• the percent interest for his year

• the amount taxed

• the amount the bank owes you for being a customer at their bank

Multiple Choice

Covert 18 months to years.

• 18 Years

• 1.5 Years

• .18 Years

• You cannot change it to years.

Multiple Choice

Dan borrowed $2,000 for 6 months at 12% annual simple interest rate. How much interest is that?

• $120

• $144

• $1,200

• $1,440