# Big Ideas Math Accelerated Red Book Chapter 4 section 4

### 11 terms by Rembrant99

#### Study  only

Flashcards Flashcards

Scatter Scatter

Scatter Scatter

## Create a new folder

terms and formulas from chapter 4, section 4.

### Essential question:

how can you find the amount of a simple interest earned on a savings account? How can you find the amount of interest owed on a loan?

### Simple interest

simple interest is money earned on a savings account or an investment. It can also be money you pay for borrowing money.

### simple interest ( I )=

principal( P ) × annual interest rate( R ) × time( T )(years)

### you put \$100 in a savings account. The account earns 6% interest per year. find the interest earned and the balance at the end of six months.

I= PRT . write the simple interest formula
= 100(0.06)[6/12) substitute values
=3 multiply
at the end of six months, you earn \$3 in interest. So, your balance is \$100 + \$3 = \$103 .

### Interest

is the money paid or earned for the use of money. The PRINCIPAL is the amount of money borrowed or deposited.

### principal

the principal is the amount of money borrowed or deposited.

### simple interest

simple interest is money or earned only on the principal.

### Algebra:

(simple interest)→ I = P ←(principal) R←( rate) T← ( time in years)

### FINDING INTEREST EARNED: You put \$500 in a savings account. The account earns 3% simple interest per year. What is the interest earned after 3 years? what is the balance after 3 years?

I= PRT write the simple interest formula
= 500 ( 0.03)(3) substitute 500 for P, 0.03 for R and 3 for T.
= 45 multiply
so the interest earned is \$45 after 3 years.
To find the balance, add the interest to the principal.
so, the balance is \$500 + \$45= \$545 after 3 years.

### FINDING AN ANNUAL INTEREST RATE: you put \$ 1000 in an account. The account earns \$100 simple interest in 4 years. What is the annual interest rate?

I= PRT write the simple interest form
100= 1000(R)(4) substitute 100 for I, 1000 for P, and 4 for T.
100= 4000 R simplify
0.025= R divide each side by 4000
The annual interest rate of the accounts is 0.025 or 2.5%

### FINDING AMOUNT PAID ON A LOAN you borrow \$600 to buy a violin. The simple interest rate is 15%. You pay off the loan after 5 years. How much do you pay for the loan?

I= PRT write the simple interest form
= 600(0.15)(5) substitute 600 for P, 0.15 for R and 5 for T
=450 multiply
To find the amount you pay, add the interest to the loan amount.
So, you pay \$600 + \$450= \$1050 for the loan.

### Flickr Creative Commons Images

Some images used in this set are licensed under the Creative Commons through Flickr.com. Click to see the original works with their full license.

Example: