Simple and Compound Interest

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Simple andcompoundinterest : 

Simple andcompoundinterest

Interest : 

Interest When you deposit money in a bank, you EARN money for it. This money is called interest. When you borrow money from a bank, you are expected to pay for it. This money is also called interest.

Principal and Simple Interest : 

Principal and Simple Interest The PRINCIPAL is the original amount of money you deposit or borrow. SIMPLE INTEREST is the interest earned only on the principal.

Simple interest Formula : 

Simple interest Formula I = prt I p r t ....................... Is the interest earned ................................. Is the principal ............. Is the interest rate per year .......................... Is the time in years

Solve : 

Solve Find the Simple Interest You borrow $300 for 5 years at an annual interest rate of 4%. What is the simple interest you pay in dollars? The interest is $60. Write the formula Substitute. Use 0.04 for 4%.

Graphing Simple interest : 

Graphing Simple interest You have $500 in an account that earns an annual rate of 5.1%. At the end of each year, you withdraw the interest you have earned. Graph the total interest you earn after 1, 2, 3, and 4 years. Make a table. Make a graph. Interest ($) Time (yr)

Compound Interest : 

Compound Interest COMPOUND INTEREST is interest paid on the original principal and on any interest that has been left in the account. THE BALANCE of an account is the principal plus the interest earned.

Compound interest Formula : 

Compound interest Formula B = p(1 + r) t B p r t .................................. Is the Balance ................................. Is the principal ............. Is the interest rate per year .......................... Is the time in years

Solve : 

Solve Find the Compound Interest You deposit $5,000 in a bank account that pays 3.75% compound interest. What is your balance after 9 years? The balance after 9 years is $6,964.07 Use a calculator to simplify the power. Write the Formula Substitute. Use 0.0375 for 3.75% Round to the nearest cent.