SIMPLE INTEREST
Interest is the amount
paid for the use of money.
FORMULA
I=PRT
INTEREST EQUALS
• PRINCIPAL - the amount of
money invested or borrowed.
• RATE - is in the annual interest
converted to a decimal.
• TIME - in years.
SAVINGS ACCOUNT
• You can also use the
formula to find the simple
interest when you deposit
money in a savings
account.
INVESTING
• Angie has $500 in a savings
account that pays 5% simple
interest.
• How much interest will she earn in
2 years?
• Note: 5% equals 0.05 as a decimal.
I=PRT
I  5000.052
I  50
Interest  $50
• How much interest will she earn if
she withdraws the money after 9
months?
• 9 months equals 9/12 of a year or
0.75 as a decimal.
I  5000.050.75
I  $18.75
Your turn.
• How much interest would you earn
on $1000, at 6¾% a year for 4¼
years?
10000.06754.25  $286.88
SIMPLE INTEREST
Simple interest is the amount
paid for the use of money.
Complete the following:
Principal
Rate
. $300.00
6%
1 $4500
9 ¼%
2 $800
5 ½%
3 $3,000
10 ¾%
4 $9,500
12 ¼%
5 $1,000
10 ¾%
Time
6 months
180 days
90 days
365 days
3 months
3 years
Interest
$9