principal . When amount of money deposited or borrowed is W the HY? Ininterest the isReal earnedWorld or paid only on the principal, it is simple interest . The u calculated discounts, You’ll calculate simple of the principal So you canearned find the amount of per a annual interest rate is the percent or paid arkups, sales tax, and tips. interest. security deposit, as in Ex. 19. year. The sum of the interest and thelend principal is called the balance . Family Loan Tim’s parents Tim
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$100 so he can buy a radio-controlled In airplane. the Real They Worldcharge Tim 5% simple annual interest. Whatlend will be the total Simple Interest Family Loan Tim’s parents Tim $100 so he can a radio-controlled amount thatbuy Tim will owe his parents Words Simple interest I is the product of the principal P, the airplane. They charge Tim 5% simple in 1annual year? interest rate r written as a decimal, and the time t in
annual interest. What will be the total years. amount that Tim will owe his parents The amount earned or paid for the use of money is called in in 1 year? Algebra I ! Prt amount of money deposited or borrowed is the principal . W The amount earned or paid for the use of money is called interest . The interest earned or paid only theprincipal principal, it for is simple i Numbers A $500 deposit 6%on simple annual interest amount of is money deposited or earns borrowed is the . When 4 years. I ! ($500)(0.06)(4) !the $120 annual rateonlyison the percent principal o simple interest earned interest is interest earned or paid principal,of it isthe . The annual interest rate the interest percent of and the principal earned or is paid per the b year. The sum ofisthe the principal called year. The sum of the interest and the principal is called the balance .
EXAMPLE
1
Finding a Balance
Simple Interest Simple Interest
To find the total amount that Tim will owe, as described above, first find the interest theinterest simple Iinterest formula. Wordsusing Simple is the product of the principal P, the Words Simple is theformula. product of tthe annual interest rateWrite r interest written as aIinterest decimal, and the time in principal I ! Prt simple years. annual interest rate r written as a decimal, and the tim ! (100)(0.05)(1) Substitute 100 for P, 0.05 for r, and 1 for t. years. ! 5Algebra I ! Prt Multiply. To findNumbers the balance, the interest principal. A $500 earns to 6%the simple annual interest for Algebra Iadd !deposit Prt 4 years. I ! ($500)(0.06)(4) ! $120 ANSWER Tim will owe a balance of $100 " $5, or $105.
Numbers A $500 deposit earns 6% simple annual inter
4 years. I ! ($500)(0.06)(4) ! $120 EXAMPLE
1
Finding a Balance
To find the total amount that Tim will owe, as described above, first find the interest using the simple interest formula.
E X A IM!PPrt LE
1
! (100)(0.05)(1)
Write simple formula. Finding ainterest Balance Substitute 100 for P, 0.05 for r, and 1 for t.