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Math 10 GMFNotes – Simple InterestTo calculate simple interest use the formula:I = Prt I = interest earnedP = Principal (How much money you start with)r = Interest Rate. This will normally be expressed as a percent. Change it to a decimal before doing the calculations.t = time. The time period must be in years in the formula. If you are given a time period in months, weeks, or days you must first change it to years.Solving Simple Interest Problems1) List all variables. Make sure to change rate to a decimal and time to years2) Substitute values into the formula3)Solve for the unknown variableExample 1a) Jill invests $430 into a savings account which gives her 2.3% interest per year. After 14 months how much interest will she earn?I = ?P = $430r = 2.3 % = 0.023t = 14 months = 1.2 yearsI = PrtI = (430)(0.023)(1.2)I = $11.87b) How much money does Jill have in her account after 14 months?To find account balance add the interest earned to the starting amount (The principal)Account balance = $11.87 + $430Account balance = $441.87Example 2Joel invests $670 into a savings account which gives him 2.7% interest per year. How many years would it take to earn $50 in interest?I= $50 P = $670r = 2.7% = 0.027t = ?I=Prt$50 = ($670)(0.027)t$50 = 18.09tT = $50/18.09 = 2.8 yearsExample 3Pam wants to earn $20 in interest in 3 years. The interest rate her account gives is 3.2% per year. How much would Pam have to invest?Try this example on your own. You should get $208.33 as a final answer ................
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