# Simple Interest ```Bellringer
Calculate the Simple Interest for #s 1 and 3 and the
Total cost for #2.
1.\$1800 at 3.2% for 4 years.
2. \$17250 at 7.5% for 6 years.
3. \$3,650 at 7⅞% for 5 years.
TALKING = 0%
Simple Interest
Simple Interest- earnings are paid on
a fixed amount of money, or Principal.
To calculate Simple Interest, use the
formula I = prt, where I is the interest
earned, p is the principal (amount
invested), r is the interest rate (must
be written as a decimal), and t is
the time invested in years.
Simple Interest
Yolanda deposited \$3,000 into an
account that earns 4&frac12;% simple
interest annually. Calculate the
interest she will earn after six
years. How much money will she
have in her account?
Simple Interest
Adrian invested \$4700 into a saving
account that earns 3.25% simple
interest for 7 years. How much
interest will be earned after the 7
years and how money will be in the
account?
Compound Interest
Compounded Interest earnings are
calculated on the original amount
plus accumulated interest. The
principal increases each year based
on the interest earned.
Compound Interest
To calculate compound interest, use
the formula, (on Page 702), where
A is the total account balance, P is
the principal, r is the interest rate
(expressed as a decimal), n is the
number of times interest is
compounded per year, and t is the
time in years. The finally step is to
subtracted the compound interest
from the principal.
Compound Interest
Compound interest can be
compounded annually (once a
year), semi-annually (2 times a
year), quarterly (3 times a year),
monthly (12 times a year), and
daily (365 times a year).
Compound Interest
By increasing the amount of times
the interest is compounded, the
interest that is earned also
increases.
Writing Prompt
Explain the steps you use in a
mathematical process we have been
studying in this class
OR