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L50 Simple Interest

The document provides an overview of simple interest, including its definition, formula (I = PRT), and examples of calculations involving loans and investments. It explains how to determine interest earned or paid over time, as well as how to find the total amount due after interest is applied. Additionally, it includes practice problems and quizzes to reinforce understanding of simple interest concepts.

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Adham Elminiawy
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16 views33 pages

L50 Simple Interest

The document provides an overview of simple interest, including its definition, formula (I = PRT), and examples of calculations involving loans and investments. It explains how to determine interest earned or paid over time, as well as how to find the total amount due after interest is applied. Additionally, it includes practice problems and quizzes to reinforce understanding of simple interest concepts.

Uploaded by

Adham Elminiawy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Simple

Interest
Learning objectives:
- To be able to calculate the simple interest.

Keywords:
interest
simple interest
principal
rate of interest
Starter
a. Before Tony started a diet, his mass was 105 kg.
his mass is now 82 kg, what percentage of his
original mass has he lost?

b. Tina bought a T-shirt in sale, it’s price was $323,


it has 15% sale on it, how much did Tina pay for
the T-shirt?
Going to the bank

You pay £100 into the bank.


They tell you that if you leave the money in the
bank they will add to it.
They will give you 10% each year!
This is called interest.
Simple and Compound Interest

• There are two types of interest

SIMPLE and COMPOUND.


Simple interest

https://www.youtube.com/watch?
v=fqDOKz2m5rY

Simple interest formula

https://www.youtube.com/watch?v=2Qv6g59-AfM
Simple Interest
Homer has 10% simple interest on his £200.
Each year he will get 10% of his £200. (£20)
Here’s how the first 5 years look:

Start (year 0)= £200


+ £20
Year 1= £220
+ £20
Year 2= £240
+ £20
Year 3= £260
+ £20
Year 4= £280
+ £20
Year 5= £300
Simple Interest
• To find the simple interest

I = prt
Where: I = interest
P= principal (the initial investment)
r = the rate tin percentage
t = time
Simple Interest
• Malek invests £2000 at a Simple Interest of 5% per
year. How much will he have by the end of 3 years?

Total SI = £2000 x 0.05 x 3 = £300 per 3 year


Principal x Interest rate x years

So at the end of three years we get:

Principal + total SI = £2000 + £300 = £2300


Simple Interest
• Rahul has a loan of 7000 dollars. He pays 2%
per month simple interest. How much will he
pay if he has the loan for three months?

• $7420
Simple Interest
• Lee lends her friend 30 000 dollars. Her friend
agrees to pay simple interest of 6% per year.
A) How much interest will lee earn after 2
years?
• B) What is the total amount that lee will
have?
Simple Interest
• Mark puts $7500 in his bank account, the
bank pays him 12% simple interest per
month, after 4 months how much money will
mark have in his account?
Interest is the amount of money charged for
borrowing or using money. When you deposit
money into a savings account, you are paid
interest. Simple interest is one type of fee paid
for the use of money.
Simple interest
Rate of interest is the
is money paid
percent charged or
only on the
earned.
principal.
I=Prt
Time in years that
Principal is the amount of the money is
money borrowed or invested. borrowed or invested
Additional 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 of 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 Use the formula.
I = 15,000  0.09  3 Substitute. Use 0.09 for 9%.
I = 4050 Solve for I.
Additional Example 1 Continued

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 principal + interest = amount


15,000 + 4050 = A Substitute.
19,050 = A Solve for A.

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


Check It Out: Example 1
To buy a laptop computer, Elaine borrowed
$2,000 for 3 years at an annual simple
interest rate of 5%. 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 Use the formula.
I = 2,000  0.05  3 Substitute. Use 0.05 for 5%.
I = 300 Solve for I.
Check It Out: Example 1 Continued

Elaine will pay $300 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 principal + interest = amount


2000 + 300 = A Substitute.
2300 = A Solve for A.

Elaine will repay a total of $2300 on her loan.


Additional Example 2: Determining the Amount of
Investment Time

Nancy invested $6000 in a bond at a yearly


rate of 3%. She earned $450 in interest. How
long was the money invested?
I = P r  t Use the formula.

450 = 6,000  0.03  t Substitute values into


the equation.
450 = 180t
2.5 = t Solve for t.
The money was invested for 2.5 years, or 2 years
and 6 months.
Check It Out: Example 2

TJ invested $4000 in a bond at a yearly rate of


2%. He earned $200 in interest. How long was
the money invested?
I = P r  t Use the formula.

200 = 4,000  0.02  t Substitute values into


the equation.
200 = 80t
2.5 = t Solve for t.
The money was invested for 2.5 years, or 2 years
and 6 months.
Additional Example 3: Computing Total Savings
John’s parents deposited $1000 into a savings
account as a college fund when he was born.
How much will John have in this account after
18 years at a yearly simple interest rate of
3.25%?
I = P r  t Use the formula.

I = 1000  0.0325  18 Substitute. Use 0.0325


for 3.25%.
I = 585 Solve for I.

Now you can find the total.


Additional Example 3 Continued

P+I=A Use the formula.

1000 + 585 = A Substitute.

1585 = A Solve for A.

John will have $1585 in the account after 18 years.


Check It Out: Example 3
Bertha deposited $1000 into a retirement
account when she was 18. How much will
Bertha have in this account after 50 years at a
yearly simple interest rate of 7.5%?

I = P r  t Use the formula.

I = 1000  0.075  50 Substitute. Use 0.075


for 7.5%.
I = 3750 Solve for I.

Now you can find the total.


Check It Out: Example 3 Continued

P+I=A Use the formula.

1000 + 3750 = A Substitute.


4750 = A Solve for A.

Bertha will have $4750 in the account after 50 years.


Additional Example 4: Finding the Rate of Interest

Mr. Johnson borrowed $8000 for 4 years to


make home improvements. If he repaid a total
of $10,320, at what interest rate did he
borrow the money?
P+I=A Use the formula.
8000 + I = 10,320 Substitute.
I = 10,320 – 8000 = 2320 Subtract 8000
from both sides.

He paid $2320 in interest. Use the amount of


interest to find the interest rate.
Additional Example 4 Continued

I = P r  t Use the formula.


2320 = 8000  r  4 Substitute.

2320 = 32,000  r Simplify.

2320 = r Divide both sides by


32,000
32,000.
0.0725 = r
Mr. Johnson borrowed the money at an annual rate
1
of 7.25%, or 7 %.
4
Check It Out: Example 4

Mr. Mogi borrowed $9000 for 10 years to


make home improvements. If he repaid a total
of $20,000 at what interest rate did he borrow
the money?
P+I=A Use the formula.
9000 + I = 20,000 Substitute.
I = 20,000 – 9000 = 11,000 Subtract 9000
from both sides.
He paid $11,000 in interest. Use the amount of
interest to find the interest rate.
Check It Out: Example 4 Continued

I = P r  t Use the formula.


11,000 = 9000  r  10 Substitute.

11,000 = 90,000  r Simplify.

11,000 = r Divide both sides by 90,000.


90,000

0.12 = r

Mr. Mogi borrowed the money at an annual rate of


about 12.2%.
Lesson Quizzes

Standard Lesson Quiz

Lesson Quiz for Student Response Systems


Lesson Quiz: Part I

1. A bank is offering 2.5% simple interest on a savings


account. If you deposit $5000, how much interest will
you earn in one year? $125

2. Joshua borrowed $1000 from his friend and paid him


back $1050 in six months. What simple annual
interest did Joshua pay his friend? 10%
Lesson Quiz: Part II

3. Mr. Berry had $120,000 in a retirement account. The


account paid 4.25% simple interest. How much
money was in the account at the end of 10 years?

$171,000
Lesson Quiz for Student Response Systems

1. To buy a house, Tom borrowed $50,000 for 5


years at an annual simple interest rate of 8%. How
much interest will he pay if he pays off the entire
loan at the end of the fifth year?

A. $4000

B. $8000

C. $20,000

D. $25,000
Lesson Quiz for Student Response Systems

2. Rob borrowed $2,500 for 18 months and repaid


$2,950. What simple annual interest did he pay?

A. 12%

B. 18%

C. 24%

D. 30%
Lesson Quiz for Student Response Systems

3. Mary invested $750 in a savings account for 2


years. The total interest earned on the investment
was $105. What was the interest rate on the
account?

A. 7%

B. 14%

C. 28%

D. 140%
Lesson Quiz for Student Response Systems

4. Rose invested $8,000 in a mutual fund at a


yearly rate of 9%. How much would she have in the
account after 5 years?

A. $8,300

B. $8,720

C. $11,600

D. $15,200

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