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6-7 Simple Interest
Warm UpWarm Up
Lesson PresentationLesson Presentation
Problem of the DayProblem of the Day
Lesson QuizzesLesson Quizzes
6-7 Simple Interest
Warm UpMultiply.
1. 800 0.04 3
2. 1,700 2 0.25
3. 900 0.05 4
4. 1,200 6 0.35
96
850
180
2,520
6-7 Simple Interest
Problem of the DayWhich number does not belong in the group?
0.75 75% 34
68
751,000
751,000
= ;340
the others equal . 34
6-7 Simple Interest
MA.7.A.1.2 Solve percent problems, including problems involving…simple interest…
Sunshine State Standards
6-7 Simple Interest
When you keep money in a savings account, your money earns interest. Interest is an amount that is charged for borrowing or using money, or an amount of money that is earned by saving money. For example, the bank pays you interest to use your money to conduct its business. Likewise, when you borrow money from the bank, the bank collects interest on its loan to you.
6-7 Simple Interest
One type of interest, called simple interest, is money paid only on the principal. The principal is the amount of money deposited or borrowed. To solve problems involving simple interest, you can use the following formula.
I = P · r · t
Interest
Principal
Rate of interest per year(as a decimal)
Time in years that themoney earns interest
6-7 Simple Interest
Find the missing value.
Additional Example 1A: Using the Simple Interest Formula
I = , P = $575, r = 8%, t = 3 years
I = P · r · t
I = 575 · 0.08 · 3
I = $138
The simple interest is $138.00.
Substitute. Use 0.08 for 8%.
Multiply.
6-7 Simple Interest
Find the missing value.
Additional Example 1B: Using the Simple Interest Formula
I = $204, P = $1,700, r = , t = 6 years
I = P · r · t
204 = 1,700 · r · 6
204 = 10,200r
20410,200
= 10,200r10,200
0.02 = r
The interest rate is 2%
Substitute.
Multiply.
Divide by 10,200 to isolate the variable.
?
6-7 Simple Interest
Find the missing value.
Check It Out: Example 1A
I = ; P = $5,000, r = 4%, t = 6 years
l = 5,000 0.04 6
= 1,200
?
6-7 Simple Interest
Find the missing value.
Check It Out: Example 1B
I = $600, P = $2,000, r = , t = 3 years
600 = 2,000 r 3
600 = 6,000 r
6006000
= 6,000r6,000
0.1 = r
10% = r
?
6-7 Simple Interest
Additional Example 2: Problem Solving Application
Avery deposits $6,000 in an account that earns 4% simple interest. How long will it take for his account balance to reach $6,800?
11 Understand the Problem
Rewrite the question as a statement:• Find the number of years it will take for Avery’s account to reach $6,800.
List the important information:• The principal is $6,000.• The interest rate is 4%.• His account balance will be $6,800.
6-7 Simple Interest
22 Make a Plan
Avery’s account balance A includes the principal plus the interest: A = P + I. Once you solve for I, you can use I = P · r · t to find the time.
Additional Example 2 Continued
6-7 Simple Interest
Solve33A = P + I
6,800 = 6,000 + I
800 = I
I = P · r · t800 = 6,000 · 0.04 · t800 = 240t
3.33 tIt will take 3
13 years.
Substitute.
Subtract to isolate the variable.
Substitute. Use 0.04 for 4%.Multiply.
Divide to isolate the variable.
Round to the nearest hundredth.
–6,000 – 6,000
800240
= 240t240
Additional Example 2 Continued
6-7 Simple Interest
Look Back44
After exactly 3 years, Avery’s money will have earned $800 in simple interest and his account balance will be $6,800.
13
I = 6,000 · 0.04 · 3 13
= 800
So it will take 3 years to reach $6,800.13
Additional Example 2 Continued
6-7 Simple Interest
Check It Out: Example 2
Linda deposits $10,000 in an account that earns 8% simple interest. How long will it take for the total amount in her account to reach $12,000?
A = P + l12,000 = 10,000 + l 2,000 = l l = P r t 2,000 = 10,000 · 0.08 · t 2,000 = 800 · t
6-7 Simple Interest
2,000 800
Check It Out: Example 2 Continued
= 800 . t 800
2.5 = t
It will take 2 years.12
6-7 Simple Interest
Lesson Quiz
Find each missing value.
1. I =
2. I = $18, P = $150, r =
3. I = $640, P =
4. I = $120, P = $600, r = 5% t =
6%
$240
$2,000
4 years
, P = $800, r = 10%, t = 3 years
, t = 2 years
, r = 4%, t = 8 years
5. Dennis deposits $6,000 in an account that earns 5.5% simple interest. How long will it take before the total amount is $8,000?
A little over 6 years
6-7 Simple Interest
1. Identify the missing value.
I = , P = $1000, r = 6%, t = 3 years
A. $180
B. $200
C. $220
D. $250
Lesson Quiz for Student Response Systems
6-7 Simple Interest
2. Identify the missing value.
I = $12, P = $120, r = , t = 1 year
A. 15%
B. 10%
C. 5%
D. 3%
Lesson Quiz for Student Response Systems
6-7 Simple Interest
3. Identify the missing value.
I = $520, P = , r = 5%, t = 8 years
A. $1600
B. $1500
C. $1300
D. $1000
Lesson Quiz for Student Response Systems
6-7 Simple Interest
4. Identify the missing value.
I = $140, P = $500, r = 7%, t =
A. 4 years
B. 5 years
C. 6 years
D. 7 years
Lesson Quiz for Student Response Systems