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Simple Interest

$2000 at 4% for 9 months Interest = $60 Balance = $2000 + $60 = $2060 2. $5000 at 6% for 2 yrs P = 5000 r = 6% = 0.06 t = 2 yrs = 2 I = P.r.t I = (5000)(0.06)(2) I = $600 Balance = P + I Balance = 5000 + 600 Balance = $5600

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366 views9 pages

Simple Interest

$2000 at 4% for 9 months Interest = $60 Balance = $2000 + $60 = $2060 2. $5000 at 6% for 2 yrs P = 5000 r = 6% = 0.06 t = 2 yrs = 2 I = P.r.t I = (5000)(0.06)(2) I = $600 Balance = P + I Balance = 5000 + 600 Balance = $5600

Uploaded by

jaine ylevreb
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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SIMPLE

INTEREST
What is simply interest?
 Simple interest is a quick and
easy method of calculating the
interest charge on a loan.
Simple interest is determined
by multiplying the daily
interest rate by the principal
by the number of days that
elapse between payments.

When you borrow money from a bank , you pay interest
for the use of the bank’s money . When you deposit
money into saving a savings account, you are paid
interest . Simple interest is one type of fee paid for the
use of money .

I = P . r . T.
I = Simple interest
P= Principal is the amount of money borrowed or
invested
r= Rate of interest is the percent charged or earned
t= Time that the money is borrowed or invested (in years)
If someone borrows money, what factors
influence how much is paid back?
 Principal – How much was borrowed .
 Time – How long it was borrowed for (in
years)
 Rate – What interest was charged . ( annual %
rate)

Amount to Payback = Principal + Interest


Interest = Principal x Rate x Time
 I = P . r. t
Example 1 Finding interest and total payment on a
loan
 To buy a car , Jessica borrowed $15,000 for 3
years at an annual simple interest rate 9% . How
much interest will she pay if she pays the entire
loan off at the end of the third year? What is the
total amount that she will repay?

First , find the interest she will pay .


I=P.r.t
I = 15,000 . 0.09 . 3
I = 4050
 Jessica will pay $4050 in interest .

You can find the total amount A to be repaid on a


loan by adding the principal P to the interest I .

P+I=A
15,000 + 4050 = A
19,050 = A

JESSICA will repay a total of $ 19,050 on her loan


To buy a Laptop computer , Elaine borrowed
$ 2,000 for 3 years at an annual simple
interest rate 5 % . How much interest will she
pay if she pays the entire loan off at the end
of third year ? What is the total amount that
she repay ?
Juan invest $5000 in bonds for 6 months at an annual
interest rate of 7 % . How much interest did he earn , and
what is the balance in his account
P=5000
r= 7% = 0.07
t= 6 moths = 0.5 years
Interest Balance
I = P. r. t Balance = P + I
I = (5000)(0.07)(0.5) Balance = 5000 + 175
I = 175 Balance = 5175

Interest owned = $175 Balance = $5175


Find the simple interest and the balance.
1. $2000 at 4% for 9 mos.
P = 2000
r= 4% = 0.04
t= 9 mos. = 0.75 yrs.
I = P. r. t
I (2000)(0.04)(0.75)
I = $60
Balance = P + I
Balance = 2000 + 60

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