Simple Interest

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# Simple Interest - PowerPoint PPT Presentation

Simple Interest. You just bought a quality used car from your Aunt for \$3,000 . She agreed to let you make payments for 3 years with simple interest at 6 percent . After you have paid her back fully and on time, how much did the car actually cost? Do you think this is a good deal?.

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### Simple Interest

You just bought a quality used car from your Aunt for \$3,000. She agreed to let you make payments for 3 years with simple interest at 6 percent. After you have paid her back fully and on time, how much did the car actually cost?

Do you think this is a good deal?

### Simple Interest

The Simple Interest is…

I=3000 X .06 X 3

\$540

Total Amount of the Loan is...\$3540

Is this a good deal?

### Simple Interest

Name any items or purchases that usually requires a person to get a LOAN.

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### Simple Interest

You will learn how banks calculate the amount in dollars to be repaid, when money is borrowed.

Otherwise known as…..

### Simple Interest

I=PRT

"P" is the Principal and is the amount you borrow.

"R" is the Rate in percent.

"T" is the Time in years.

### Simple Interest

Interest paid on the initial investment (the principal) only.

### Simple Interest

When banks use simple interest, they consider the principal, the interest rate, and the length of time of the loan.

### Simple Interest

"P" How much is the principal?

"R" What is the Rate?

"T" What is the time?

"P" \$100

"R" 10%

"T" 2 years

### Simple Interest

What is the Total Amount Owed?

\$120

### Simple Interestpractice

You get a loan for a boat in the amount of \$7000 at 6% for 5 years.

I=PRT

"P" is \$7000

"R" 6% (or .06)

"T" 5 Years

### Simple Interestpractice

I = 7000 X .06 X 5

I = \$7000 at 6% for 5 years

I = 420 X 5

I = \$2100

Total Money Owed: \$2100 + \$7000 = \$9100

### Simple Interestpractice

You get a loan to move for the amount of \$2500 at 4% for 6 months.

### Simple Interest

I=PRT

"P" is \$2500

"R" 4% (or .04)

"T" 6 months = ½ Year = .5

### Simple Interest

I=2500 X .04 X .5

The Simple Interest is…

\$50

Total Amount of the Loan is...\$2550

Now You will practice.
• Complete the following chart.
• You will trade with the awesome person sitting next to youand check answers.

### Roll CallWhat is Simple Interest?

Interest paid on the initial investment (the principal) only.

### What is….

I=PRT?

"P" is the Principal and is the amount you borrow.

"R" is the Rate in percent.

"T" is the Time in years.

After you figure out Simple Interest you will know if you can afford to pay for things such as……