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Chapter 12 Lesson 3

Chapter 12 Lesson 3. Simple Interest Pages 331-332 1-3 all. Cornell Notes – Chap. 12 Lesson 3. Main Ideas/Cues: Interest Principal Annual interest rate Balance. Details: The amount earned or paid for the use of money. An amount of money that is deposited or borrowed.

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Chapter 12 Lesson 3

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  1. Chapter 12 Lesson 3 Simple Interest Pages 331-332 1-3 all

  2. Cornell Notes – Chap. 12 Lesson 3 Main Ideas/Cues: Interest Principal Annual interest rate Balance Details: The amount earned or paid for the use of money. An amount of money that is deposited or borrowed. The percent of the principal earned or paid per year. The sum of the interest and the principal.

  3. Cornell Notes – Chap. 12 Lesson 3 Main Ideas/Cues: Simple Interest Details: Interest that is earned or paid only on the principal. The simple interest I is the product of the principal P, the annual interest rate r written as a decimal, and the time t in years. I = Prt

  4. Problem #1 First Step: Write the Problem 1. Miguel deposited $500 into an account that earns 6% simple annual interest. What will his account balance be after 2 years?

  5. Problem #1 Second Step: Rewrite the problem using the Simple Interest formula. 1. $500 deposited with a 6% simple annual interest, balance after 2 years? I = Prt I = 500 • 0.06 • 2 Simple Interest formula Replace variables with given amounts

  6. Problem #1 Third Step: Multiply. 1. I = 500 • 0.06 • 2 I = 60 Interest

  7. Problem #1 Fourth Step: Add the Interest to the principal. 1.500 + 60 Account Balance = $560 Answer

  8. Problem #2 First Step: Write the Problem 2. You buy a savings bond worth $300. After 4 months, the bond is worth $305. Find the simple annual interest rate.

  9. Problem #2 Second Step: Rewrite the problem using the Simple Interest formula. 2. $300 savings bond what is the simple annual interest, if the balance after 4 months is $305? I = Prt 305 – 300 = 5 5 = 300 • r • 4 months 5 = 300 • r • 1/3 Simple Interest formula Subtract original amount from balance after 4 months to find I Replace variables with given amounts Rewrite months as part of a year (in simplest form)

  10. Problem #2 Third Step: Multiply. 2. 5 = 300 • r • 1/3 5 = 100 • r New Problem

  11. Problem #2 Fourth Step: Isolate the variable by performing the inverse operation (division) 2.5 = 100 • r Simple annual interest rate = 5% Answer

  12. Problem #3 First Step: Write the Problem 3. Tricia put $750 into a certificate of deposit. Her simple annual interest rate is 5%. She receives a check for the interest at the end of each year. How long will it take Tricia to earn $150 in interest?

  13. Problem #3 Second Step: Rewrite the problem using the Simple Interest formula. 3. $750 certificate of deposit, simple annual interest rate is 5%, how long will it take it earn $150 in interest? I = Prt 150 = 750 • 0.05 • t Simple Interest formula Replace variables with given amounts

  14. Problem #3 Third Step: Multiply. 3. 150 = 750 • 0.05 • t 150 = 37.50 • t New Problem

  15. Problem #3 Fourth Step: Isolate the variable by performing the inverse operation (division) 3.150 = 37.50 • t time = 4 years Answer

  16. Cornell Notes Summary Include the following questions and answers in your Cornell Notes Summary. What does each variable in the formula I = Prt represent?

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