7.01 simple loans

7.01

Pgs: A 11, A 25

Warm Up! Choose ONE

Warm Up! Choose ONE:

ANSWER

Let’s Review!

Decimals, Fractions and Percents

Decimals, Fractions, and Percents are just different ways of
showing the same value

Converting between Fractions and

Decimals

Fraction to Decimal

The fraction line tells us to divide, so
let’s divide!

½ = 1÷2 = 0.5

¾ = __÷__ = ___

⅚ = __÷__ = ___

Decimal to Fraction

Say the decimal out loud, then write it
as a fraction. (may need to reduce)

0.5 = “zero and five tenths” = 5/10 = ½

0.75 = “zero and seventy five
hundredths” = ___ = ___

0.83 = “zero and eighty three
hundredths” = ___ = ___

Fill in the Blanks

Fill in the Blanks

Converting between Decimals and

Percents

Decimal to Percent

A percent is always a part of
100. Because there are two 0s
in 100, we can move our
decimal 2 places to the right
to convert to a percent.

0.5 = 050. = 50%
0.25 = ___ = ___%
0.03 = ___ = ___%

Fraction to Percent

Divide the numerator by the
denominator, then multiply
by 100 (or slide decimal two
places to the right).

17/50 = 17÷50 = 0.34 = 34%
½ = 1÷2 = 0.5 = ___%
13/20 = ___ = ___ = ___%

WE DO

YOU DO

Fill in the Blanks

Fill in the Blanks

A method to calculate the amount of money earned or paid for the
use of money.

Match

Match up the Financial Literacy Vocabulary

• Loan

• Principal

• Interest

• Rate

money that is loaned or borrowed

Original loan or investmeny amount

money earned or paid for a loan

% of the principal paid to use money

• money that is loaned or borrowed

• Original loan or investmeny amount

• money earned or paid for a loan

• % of the principal paid to use money

Let’s Practice!

An education loan of $60,000 for 10 years has an annual rate of 5%.
What is the simple interest owed on this loan?

I DO

Solve for I

Let’s Practice!

ANSWER

An education loan of $60,000 for 10 years has an annual rate of 5%.
What is the simple interest owed on this loan?

I DO

Solve for I

I = 60000 x .05 x 10

I = $30,000

Let’s Practice!

A car loan is $25,000 for 5 years. The annual interest rate is 2.5%.
What is the simple interest owed on this loan?

WE DO

Solve for I

Let’s Practice!

ANSWER

A car loan is $25,000 for 5 years. The annual interest rate is 2.5%.
What is the simple interest owed on this loan?

WE DO

Solve for I
I = 25000 x .025 x 5 = $3125

Let’s Practice!

A car loan is $25,000 for 5 years. The annual interest rate is 6%. What
is the simple interest owed on this loan?

WE DO

Solve for I

Compare this problem to
the previous one. What
happens when the
interest rate increases or
decreases?

Let’s Practice!

ANSWER

A car loan is $25,000 for 5 years. The annual interest rate is 6%. What
is the simple interest owed on this loan?

WE DO

Solve for I
I = 25000 x .06 x 5
I = $7500

Compare this problem to
the previous one. What
happens when the
interest rate increases or
decreases?

Let’s Practice!

If you take out a loan at 9% simple interest for 5 years, and the interest you owe is $10,350, what was the original amount of the loan?

WE DO

Solve for P

Let’s Practice!

ANSWER

If you take out a loan at 9% simple interest for 5 years, and the interest you owe is $10,350, what was the original amount of the loan?

WE DO

Solve for P

10350 = P x .09 x 5

P = 23000

Let’s Practice!

If you borrow $5,000 for 5 years at 11% simple interest, what is the
total amount you will pay back for the loan?

WE DO

Solve for I. Then, add “I” to “P” to find the total!

Let’s Practice!

ANSWER

If you borrow $5,000 for 5 years at 11% simple interest, what is the
total amount you will pay back for the loan?

WE DO

Solve for I. Then, add “I” to “P” to find the total!

I = prt =5000*.11*5 = 2750  Total = 5000 + 2750 = 7750

Multiple Choice

Caleb needs a $5,000 personal loan.

Which loan option would allow him to pay back the least amount of money?

• 24-month loan with an 8% annual simple interest rate

• 36-month loan with a 6% annual simple interest rate

• 60-month loan with a 4% annual simple interest rate

• 72-month loan with a 2% annual simple interest rate

Let’s Practice!

What do you
THINK is the
right answer?
Why?

EXIT TICKET:

ANSWER

You buy a house for $257,000. The mortgage had a 3% interest rate, to be paid back after 30 years. What is the total amount you will pay back for the loan?

YOU DO

Solve for I. Then, add “I” to “P” to find the total!

I = 257000 x .03 x 30

I = 231300

257000 + 231300 = $488300

7.02

Warm Up!

Warm Up!

ANSWER

Let’s Review!

Decimals, Fractions and Percents

Decimals, Fractions, and Percents are just different ways of showing
the same value

Vocabulary:

Loan
• Money that is loaned or borrowed, usually at
a cost.

Principal
• The original amount of money invested,
loaned, or borrowed.

Interest
• Amount of money earned or paid for the use
of money.

Rate
• A percentage of the principal which is
charged or paid for the use of money.

Vocabulary Continued

Compound Interest

The interest on both the initial principal AND the accumulated interest
for previous periods.

Let’s Explore!

If I invest 1000 for 2 years at an interest rate of 12%, which method
will make earn more interest?

Let’s Practice!

Let’s Practice!

ANSWER

Let’s Practice!

Let’s Practice!

ANSWER

Let’s Practice!

Let’s Practice!

Let’s Practice!

I am buying a $39,950 car! But I need help deciding which loan I
should take out to pay for the car.

WE DO

•My bank offers me a simple interest loan for 5 years at 3.1%

•The dealer offers me a compound interest loan for the same
5 years, but the interest is only 2.5%!

Which loan is the most expensive?

Let’s Practice!

ANSWER

I am buying a $39,950 car! But I need help deciding which loan I
should take out to pay for the car.

WE DO

•My bank offers me a simple interest loan for 5 years at 3.1%

•The dealer offers me a compound interest loan for the same
5 years, but the interest is only 2.5%!

Which loan is the most expensive?

I = (39950)(5)(.031) = (39950)(.153) = 6012.350; TC = 39950.
+ 6012.350 = 45,962.36, Simple Interest loan is greater.

EXIT TICKET

EXIT TICKET:

ANSWER

(2600)(0.15)(2)= 780 in interest paid

(2600)(1+0.15)^2 = 3438.50 – 2600=
838.50 in interest paid

What is a scenario when we would run into
simple interest?
(other than the ones we talked about in class.)

How are you feelin’ about this interest thingie?

I am NOT interested
at all ‘cause it makes
NO CENTS!

This is GREAT!
As in, I’m gonna
Make a GREAT BIG
chunk of MOOLAHH
SOMEDAY ‘cause I got
this ALL DAY LONG!

Dollars, smallarz,
I am not too sure
about all of this
stuff but I will
keep tryin’.