Calculating Interest

Vocabulary - Page 8 # 1-2

1. Interest – the amount of money earned on borrowed money.

2. Simple Interest – calculated only on the original amount of investment

2. Compound Interest- calculated on the original investment and the interest earned

Multiple Choice

What is the formula for simple interest?

• T = pri

• I = prt

• R = ipt

• P = irt

Multiple Choice

What does the I in the interest formula stand for?

• installment

• investment

• interest

Multiple Choice

What does the p in the interest formula stand for?

• principal

• payment

• percentage

Multiple Choice

What does the r in the interest formula stand for?

• repayment

• rate

• ratio

Multiple Choice

What does the t in the interest formula stand for?

• time

• taxes

• triathlon

Labelling

Label each part of the formula

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End Amount

Principal

Compound Period

Time

Rate

Multiple Choice

Semi-Annually means how many times a year?

• 4

• 2

• 1

• 6

Multiple Choice

Monthly means how many times a year?

• 4

• 12

• 52

• 365

Multiple Choice

Annually means how many times a year?

• 4

• 2

• 1

• 6

Multiple Choice

Quarterly means how many times a year?

• 4

• 2

• 1

• 6

Labelling

Page 8 #3 Simple Interest

Complete the table to compare how the balance will grow over 5 years in an account earning 5% simple interest

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$625

$575

$600

Labelling

Page 8 #3 Compound Interest

Complete the table to compare how the balance will grow over 5 years in an account earning 5% interest compounded annually.

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$578.81

$638.14

$607.75

Multiple Choice

Page 8 #4

Can you find a rule for determining the balance in each account after x years?

Simple Interest

• $$500+25x$$

• $$500\left(1.05\right)^x$$

Multiple Choice

Page 8 #4

Can you find a rule for determining the balance in each account after x years?

Compound Interest

• $$500+25x$$

• $$500\left(1.05\right)^x$$

Page 9

Page 9 #5