1. 11/7/11 • Bellringer: • What do you know about interest (the money kind)?

2. Simple Interest

3. http://www.youtube.com/watch?v=iQSDO20sL4w

4. Simple Interest is money added onto the original amount saved (earned) or borrowed (charged).

5. Simple Interest Formula I = prt I (Interest) - The amount earned or the amount charged p (Principal)- The amount borrowed or deposited r (Rate) – Percent at which the interest is charged t (Time)- In years (if given in months, put it over 12)

6. How much money would you pay in interest if you borrowed $1,600 for 1 ½ years at 16% APR? Calculating Simple Interest Convert the percent to a decimal. 16% = .16 I = prt I = $1,600 x .16 x 1.5 I = $384

7. Shawnique bought a beautiful house for $350,000. Her loan was for 30 years at 6.5% APR. How much money will she end up paying in interest? 6.5% = . 065 I = prt I = $350,000 x .065 x 30 I = $682,500

8. Kent put $8,500 into an 18 month CD. The interest rate is 3.25% How much money will Kent earn in interest? 3.25% = . 0325 I = prt I = $8,500 x .0325 x 1.5 I = $414.38

9. Katie bought a new sports car for $28,500. She financed her car for 6 years at 6.75%APR. How much will she end up paying for interest on her car? 6.75% = . 0675 I = prt I = $28,500 x .0675 x 6 I = $11,542.50

10. Cody bought a new truck for $25,000. He took out a loan for 5 ½ years with 7.75% APR. How much will Cody end up paying in interest? 7.75% = . 0775 I = prt I = $25,000 x .0775 x 5.5 I = $10,656.25

11. Tia saved her $9,000 for 2 ½ years at 4.25% APR in a CD, to go on a month long vacation with her family. How much did she earn in interest? 4.25% = . 0425 I = prt I = $9,000 x .0425 x 2.5 I = $956.25

12. Joe borrows $200 from the bank at 6% simple interest for 3 years. What interest does he owe, and what is his total balance (amount to payback)? Interest Balance Balance = P + I Balance = 200 + 36 Balance = 236 Balance = $236

13. Worksheet • Do problems 1-8

14. 11/8/11 • Get out your homework. • Bellringer: Katie bought a new sports car for $28,500. She financed her car for 6 years at 6.75%APR. How much will she end up paying for interest on her car?

15. Homework Answers • Interest= $204 5. Interest= $43.75 Total= $1004 Total= $1793.75 2. Interest= $37.50 6. Interest= $360 Total= $287.50 Total= $2360 3. Interest= $72 7. Interest= $1250 Total= $972 Total= $6250 4. Interest= $125 8. Interest= $450 Total= $1375 Total= $6450

16. Juan invests $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? Interest Balance Balance = P + I Balance = 5000 + 175 Balance = 5175 Balance = $5175

17. Find the simple interest and the balance. Balance = P + I Balance = 2000 + 60 Balance = $2060

18. Find the annual simple interest rate.

19. Find the annual simple interest rate.

20. Find the principal amount invested.

21. Quick Draw for Points • You will have 60 seconds to solve each problem • This is your exit ticket. Fold your piece of paper so you have 4 boxes.

22. Example 1: Finding Interest 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? First, find the interest she will pay. I = PrtUse the formula. I = 15,000  0.09 3 Substitute. Use 0.09 for 9%. • I = 4050Solve for I.

23. Example 1A: Finding Total Payment on a Loan What is the total amount that she will repay? 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 = Aprincipal + interest = total amount 15,000 + 4050 = ASubstitute. • 19,050 = ASolve for A. Jessica will repay a total of $19,050 on her loan.

24. 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tUse the formula. 200 = 4000  0.02 t Substitute values into the equation. 200 = 80t • 2.5 = tSolve for t. The money was invested for 2.5 years, or 2 years and 6 months.

25. 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tUse the formula. I = 1000  0.075  50 Substitute. Use 0.075 for 7.5%. • I = 3750 Solve for I. The interest is $3750. Now you can find the total.

26. Example 3 Continued P + I = AUse the formula. 1000 + 3750 = A Substitute. • 4750 = ASolve for A. Bertha will have $4750 in the account after 50 years.

27. 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 = AUse 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.

28. 11,000 = rDivide both sides by 90,000. 90,000 0.12 = r Example 4 Continued I = PrtUse the formula. 11,000 = 9000 r10 Substitute. 11,000 = 90,000 rSimplify. Mr. Mogi borrowed the money at an annual rate of about 12.2%.

29. Summary • I = __________ • P=__________ • r = __________ • t = __________ • Interest Formula: I = ( )( )( ) • Balance Formula: A = ___ + ___

30. Part 2 on worksheet

31. 11/9/11Bellringer: Fill in the blanks. • I = __________ • P=__________ • r = __________ • t = __________ • Interest Formula: I = ( )( )( ) • Balance Formula: A = ___ + ___

32. Homework answers: • 350*0.05*4= $70 • 180=1500*0.04*t t=3 years • 650+195= $355 • 82.50+1000= $1082.50 • 96=800*r*4 r=3% • 139.50=930*0.06*t t=2.5

33. Word problem • Read the problem, underline what you don’t know. • When you are finished, write in 25 words or less how you did the problem.

34. Cody bought a new truck for $25,000. He took out a loan for 5 ½ years with 7.75% APR. How much will Cody end up paying in interest? 7.75% = . 0775 I = prt I = $25,000 x .0775 x 5.5 I = $10,656.25