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Ratio, Proportion, and Percent

Interest. Ratio, Proportion, and Percent. Quotable. “The real secret of success is enthusiasm.” -- Walter Chrysler, entrepreneur. Objective. Learn and apply the interest formula. Interest Formula. I= Prt I= Interest P= Principal, the amount of money borrowed or invested

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Ratio, Proportion, and Percent

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  1. Interest Ratio, Proportion, and Percent

  2. Quotable “The real secret of success is enthusiasm.” -- Walter Chrysler, entrepreneur

  3. Objective • Learn and apply the interest formula.

  4. Interest Formula I=Prt I= Interest P= Principal, the amount of money borrowed or invested r= rate, the annual rate of interest, a percent t= time, in years over which the money is used

  5. Example 1 Mrs. Turner deposits $11,500 in a six month savings certificate as Regions. She can make no additional deposit to the certificate during the six months that it is invested. At the end of the six months, she will receive $603.75 in interest on her original deposit. What is the annual interest rate?

  6. Example 1- Solution Use formula- I=Prt Because rate of interest is annual, you express 6 months as 0.5 years. 603.75=11,500 x r x 0.5 603.74=5750r R= 0.105 or 10.5% annual interest rate

  7. Example 2 Roger has deposited $2500 in a special savings plan through Redstone Credit Union. The plan pays 8% interest, compounded quarterly. If Roger makes no additional deposits, what is the value of the investment after 9 months?

  8. Example 2- Solution For each interest computation, the rate is 0.08 and the time is 0.25 (one quarter of a year). Note that the principal changes after each quarter or 3 months. A=2500(1+0.08/4)^4x0.25 A=2500(1+0.08/4)^3 A=2500(1.02)^3 A= 2500(1.061208) A= $2653.02

  9. Try it… Erica borrowed $1800 for one year at 17% simple interest. What was the total amount to be repaid? • $2006 • $2106 • $2160 • $2600

  10. Homework • Pg. 261; 1-12

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