Do Now 4/12/11
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Take out HW from last night.
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Copy HW in your planner.
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Text p. 365, #8-16 evens and #15
Text p. 365, #18, 20, 23, 26
Text p. 809, #25-36 all
Quiz sections 7.5-7.7 Wednesday (Bring notecard for quiz)
Chapter 7 Test Friday
In your notebook, answer the following question. Find the
simple interest on an account with the following: interest
rate = 7%, principal = $325, time = 8 years. What is the
account balance after the 8th year?
Interest = (325)(0.07)(8)
= $182.00
Balance
= Principal + Interest
= $325 + $182.00
= $507.00
Homework
Text p. 365, #8-16 evens & 15
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8) $500; $1750
10) $72.90; $672.90
12) $4; $104
14) $306
16) 6.25%
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15)
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Balance
Principal
Interest Rate
Time
$5,000
$4,000
5%
5 years
$11,160
$9,000
8%
36 months
$3,207
$3,000
4.6%
18 months
Objective
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SWBAT calculate interest earned and account balances
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SWBAT review percent of change, percent applications,
and simple and compound interest
Section 7.7 “Simple and Compound Interest”
SIMPLE INTERESTIs the product of the principal, the annual
interest rate, and the time in years.
I  P r t
Principal – the amount borrowed, loaned, or in savings.
Annual interest rate – the percent of the principal you would
earn (or pay) as interest in ONE year.
Time in years – when time is less than a year, write time as a
fraction of the year.
Writing Time in Years…
I  P r t
Time in years – when time is less than a year, write time as a
fraction of the year.
Write the months as a fraction of a year.
3 months
7 months
3 1

12 4
7
12
10 months
10 5

12 6
Simple Interest
You have $1,000 in a savings account in a
local bank. The annual interest rate is 3%.
How much interest will the bank pay you in a
month?
Principal = $1000
Interest rate = 3% or 0.03
Time = one month or 1/12
I  P r t
1
I  1000  0.03 
12
I  $2.50
Simple Interest
You borrowed $18,000 for a new car. The
annual interest rate is 12%. What is the
interest you will have to pay in two years to
borrow this money?
Principal = $18,000
I  P r t
Interest rate = 12% or 0.12
I  18000  0.12  2
Time = two years or 2
I  $4320
Account Balance
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When an account earns interest it is added
to the money in the account. The
BALANCE (A) of an account that earns
simple annual interest is the sum of the
principal (P) and the interest (Prt).
A  P  Pr t
Balance
Finding an Interest Rate
Suppose you save $1400 in a savings
account that earns simple annual interest.
After 9 months, the balance in your account is
$1421. Find the annual interest rate.
Principal = $1400
A  P  Pr t
Balance = $1421
1421  1400  1400(3 / 4)r
Time = 9 months
21 1050r
0.02  r
The interest
rate is 2%
This makes more “cents”…
COMPOUND INTEREST-
Is interest that is earned on BOTH the principal and any
interest that has been earned previously.
A  P(1  r )
t
Account balance– the amount of money in an account.
Principal – the amount borrowed, loaned, or in savings.
Annual interest rate – the percent of the principal you would
earn (or pay) as interest in ONE year.
Time in years – when time is less than a year, write time as a
fraction of the year.
This makes more “cents”…
You deposit $300 in the bank. This is your beginning
balance. The annual interest rate is 6%. Each year the
simple interest is computed and then added to your
beginning balance. (this is compounded interest). If this
pattern continues, how much will you have in the account at
the end of 3 years?
Principal = $300
Interest rate = 6%
Time = 3 years
A  P(1  r )
t
A  300(1  0.06)3
A  $357.30
After 3 years you will have $357.30
Compound Interest
You deposit $1,500 in a savings account in
a local bank. The annual interest rate is 2.4%
compounded annually. Find the balance after
6 years?
Principal = $1500
A  P(1  r )
Interest rate = 2.4% or 0.024
A  1500(1  0.024)6
Time = 6
A  $1729.38
t
Quiz sections 7.5-7.7 Review
Section 7.5 “Percent of Change”
Percent of change indicates how much a
quantity increases or decreases with respect to
the original amount.
The percent of change of a quantity is given by:
Amount of change
Original amount
The percent is a PERCENT of INCREASE if the
quantity increased and it is a PERCENT of
DECREASE if the quantity decreased.
Section 7.6 “Percent Applications”
Percents can be applied to many
everyday ordinary activities:
1) markups
2) discounts
3) sales tax
4) tips
Markups
Retail price
=
Wholesale price
+ Markup
(% of wholesale price)
Discounts
Sale price
=
–
Original price
Discount
(% of original
price)
Sales Tax and Tips
Total cost
= Food bill
+
Sales tax
(% of bill)
+
Tip
(% of bill)
Section 7.7 “Simple and Compound Interest”
SIMPLE INTERESTIs the product of the principal, the annual interest
rate, and the time in years.
I  P r t
Principal – the amount borrowed, loaned, or in savings.
Annual interest rate – the percent of the principal you would
earn (or pay) as interest in ONE year.
Time in years – when time is less than a year, write time as a
fraction of the year.
Finding an Interest Rate…
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When an account earns interest it is added
to the money in the account. The
BALANCE (A) of an account that earns
simple annual interest is the sum of the
principal (P) and the interest (Prt).
A  P  Pr t
Balance
This makes more “cents”…
COMPOUND INTEREST-
Is interest that is earned on BOTH the principal and any
interest that has been earned previously.
A  P(1  r )
t
Account balance– the amount of money in an account.
Principal – the amount borrowed, loaned, or in savings.
Annual interest rate – the percent of the principal you would
earn (or pay) as interest in ONE year.
Time in years – when time is less than a year, write time as a
fraction of the year.
Notecard
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On one side of your notecard, you may write in the formulas for percent
of change, percent applications, and simple and compound interest.
Simple Interest
I  prt
Compound Interest
Percent of Change
A  P(1  r )t
A  p  prt
P
| amount of change |
100
original
Markup
Retail price = Wholesale price + Markup
(% of wholesale price)
Discount
Sale price = Original price
– Discount
(% of original price)
Sales Tax & Tip
Total price = Original price + Sales Tax
+ Tip
(% of original price)
(% of original price)
Classwork
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Text p. 365, #18, 20, 23, 26