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.

Fill in the Blanks

If you have an interest rate of 6.5%, what is the decimal form?

Fill in the Blanks

If you have an interest rate of 22%, what is the decimal form?

Fill in the Blanks

If you have an interest rate of 9%, what is the decimal form?

Multiple Choice

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

• 8

• 8/12

• 0.6

• 1.5

Fill in the Blanks

If you borrow money for 6 months, what do you use for the fraction of years?

​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?

Some text here about the topic of discussion

Fill in the Blanks

​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?

WHAT DO WE USE IN THE EQUATION FOR YEARS?

Fill in the Blanks

​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?

WHAT DO WE USE FOR THE RATE?

Fill in the Blanks

​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?

WHAT DO WE USE FOR THE PRINCIPAL?

Fill in the Blanks

​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?

If we use the equation below, how much interest does she make?

I = 580 x 0.025 x 2

Fill in the Blanks

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 DO WE USE FOR THE RATE?

Fill in the Blanks

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 DO WE USE FOR THE YEARS?

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

Fill in the Blanks

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?

NOW SOLVE FOR CARRIE'S INTEREST USING THE FORMULA:

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

Fill in the Blanks

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.

Find the interest on their loan.

Fill in the Blanks

Abbie borrows $3,216 at a rate of 6.8% per year. How much simple interest will she owe if it takes 2 years to repay the loan?

Use I = P x R x T and solve for her interest. (Round to the hundredths place)

Fill in the Blanks

Jeremy borrows $14,280 at a rate of 3.8% per year. How much simple interest will he owe if it takes 6 months to repay the loan?

I = P x R x T

Hint: Time in YEARS

Fill in the Blanks

Harmon is depositing $5,500 into a savings account with a simple interest rate 5.4%. She plans on leaving her money in the account for 7 years, what interest will she earn on her money?

I = P x R x T

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