Notes Over 7 – 8

1. Suppose you deposit $1000 in a savings account that earns 6% per year. Find the interest earned in two years.

timerateprincipalI

I 260

1000

Simple Interest FormulaI = prt = (principal) (rate) (time)

.060 2

120 120$Find the total of the principal plus interest..

interestprincipal Total 1000 120 1120 120,1$

Notes Over 7 – 8

2. Complete the table. $400, 5%, for 4 years

Simple Interest FormulaI = prt = (principal) (rate) (time)

Principle at Beginning of year

Interest Balance

Year 1: $400

Year 2:

Year 3:

Year 4:

400 05. 20 420

420 05. 21 441

441 05. 22 463

463 05. 23 486

Notes Over 7 – 8

The same thing can be found by using the compound interest formula:

Simple Interest Formula

trpB 1400B 05.01 4

405.1400B

20.486B

Notes Over 7 – 8

3. Find the balance compounded semiannually. Deposit: $900, Int. Rate: 2%, Time: 3 years

Simple Interest Formula

tn

n

rpB

1

900B

02.01

32

601.1900B

37.955B

2

1. $200, 7%, 2 years

timerateprincipalI

I 214

200

Find the simple interest.

.070 2

28 28$

Pg 372 7 – 8 #1 – 6, 8 – 18

2. $870, 6%, 9 months

timerateprincipalI

I 078 .060 /129

15.39 15.39$

3. $495, 8%, 2 years - annuallyFind the balance.

Pg 372 7 – 8 #1 – 6, 8 – 18

trpB 1495B 08.01 2

208.1495B

37.577B

4. $1,280, 13%, 3 years - annuallyFind the balance.

Pg 372 7 – 8 #1 – 6, 8 – 18

trpB 11280B 13.01 3

313.11280B

91.1846B

5. $2,000, 5%, 2 years - semiannuallyFind the balance.

Pg 372 7 – 8 #1 – 6, 8 – 18

tn

n

rpB

1

000,2B

05.01

22

4025.1000,2B

63.207,2B

2

6. $15,600, 10%, 3 years - semiannuallyFind the balance.

Pg 372 7 – 8 #1 – 6, 8 – 18

tn

n

rpB

1

600,15B

10.01

32

605.1600,15B

49.905,20B

2

Pg 372 7 – 8 #1 – 6, 8 – 18