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Understanding Simple Interest: Calculating Original Investment and Interest Rate

This presentation provides practical examples of simple interest applications. In the first scenario, we analyze how Ann's initial investment of $5600 grew to $7840 over eight years at a 5% interest rate. We derive and solve the equation to find the original investment. The second scenario explores how Megan borrowed $7000, with a current payback of $8225 over five years, leading to an interest rate calculation of 3.5%. These examples illustrate the process of calculating principal amounts and interest rates using simple interest formulas.

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Understanding Simple Interest: Calculating Original Investment and Interest Rate

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Presentation Transcript

  1. Applications of Simple Interest Example 1: Eight years ago Ann put some money in a savings account at 5% interest. She checked her account balance and found it to be $7840. What was the original amount invested? 1) Variable declaration: Let x represent the original amount invested. This is called the principal.

  2. Eight years ago Ann put some money in a savings account at 5% interest. She checked her account balance and found it to be $7840. What was the original amount invested? 2) Write the equation: Since the original amount (principal) is x, …

  3. Eight years ago Ann put some money in a savings account at 5% interest. She checked her account balance and found it to be $7840. What was the original amount invested? 3) Solve the equation:

  4. Eight years ago Ann put some money in a savings account at 5% interest. She checked her account balance and found it to be $7840. What was the original amount invested? x = original amount 4) Write an answer in words, explaining the meaning in light of the application The original amount that Ann invested was $5600.

  5. Applications of Simple Interest Example 2: Five years ago Megan borrowed $7000 for a kitchen project. Her current payback amount is $8225. What was the interest rate? 1) Variable declaration: Let r represent the interest rate.

  6. Five years ago Megan borrowed $7000 for a kitchen project. Her current payback amount is $8225. What was the interest rate? 2) Write the equation: Since the rate is r, …

  7. Five years ago Megan borrowed $7000 for a kitchen project. Her current payback amount is $8225. What was the interest rate? 3) Solve the equation:

  8. Five years ago Megan borrowed $7000 for a kitchen project. Her current payback amount is $8225. What was the interest rate? r = interest rate 4) Write an answer in words, explaining the meaning in light of the application Megan’s interest rate was 3.5%.

  9. END OF PRESENTATION

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