Calculating simple compound interest
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Calculating Simple & Compound Interest. Simple Interest. Simple interest (represented as I in the equation) is determined by multiplying the interest rate by the principal by the number of periods. (Same amount every year). Simple Interest equation : I = Prt.

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Calculating Simple & Compound Interest

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Calculating simple compound interest

Calculating Simple & Compound Interest


Simple interest

Simple Interest

Simple interest (represented as I in the equation) is determined by multiplying the interest rate by the principal by the number of periods. (Same amount every year)


Simple interest equation i prt

Simple Interest equation: I = Prt

Principal sum (P)- The initial amount of money invested or borrowed (ie. $10, 000)

Interest rate (r)- The amount charged or given to the principal sum (ie. 5%)

Interest period (t)- The number of years you plan to invest or borrow (ie. 5 years)


Let s try it

Let’s try it

Tim, a grade 9 student at Preston High school received $1000 from his grandma for his birthday. After learning about savings in his BBI class, he decides to go to his bank and put the money into a savings account at an interest rate of 3% annually until he goes to university in 4 years.

Calculate the simple interesting using the simple interest equation: I=Prt


I prt

I = Prt

  • P = $1000

  • r= 3% annually

  • t= 4 years

    I = 1000 x 0.03 x 4

    = 120

    Therefore Tim will have made $120 in interest over the 4 years resulting in a total of $1120.


Compound interest

Compound Interest

  • Interest calculated on the amount saved or borrowed plus any interest already accumulated


Calculating compound interest using the tim example from before

Calculating Compound Interest, using the Tim example from before


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