Notes

Simple Interest Formula

Definition: Simple interest I is the product of the principal p, the annual interest rate
r, and the time t (where time is expressed in years).

Translate:
Example 1: Tammy puts $580 into a savings account. The account pays 3% simple
interest. How much interest will she earn in 5 years?

6 months?

Example 2: I borrowed $5,500 from the bank to buy my outdoor wood furnace. The
interest rate was 8% per year. How much simple interest will I pay if I take 3 years to
repay the loan?

Example 3: Sleepy Carl bought a new bunk bed for $900 using a credit card. His card
has an interest rate of 19%. If he has no other charges on his card and does not make a
payment, how much money will he owe after one month?

Finding the Rate

Example 4: Coach Dean is taking out a car loan for $5,000. He plans on paying off the
car loan in 2 years. At the end of 2 years, Coach Dean will have paid $300 in interest.
What is the interest rate on the car loan?

Independent Practice