Simple Interest

Introduction

Loans and Interest Rates are an important part of everybody's life at some point. Having good knowledge on these topics, are especially important as you begin your life as a financially independent individual.

We borrow some amount or money from a bank or a money lender.

What is simple interest?

This borrowed amount is called as loan. However, at the time of returning the loan to the bank or the money lender we have to pay back an amount somewhat bigger than the loan.

This additional amount is called as SIMPLE INTEREST.

Formula:

I = PRT

•I = interest earned (amount of money the bank pays you)

•P = Principle amount invested or borrowed.

•R = Interest Rate usually given as a percent (must changed to decimal before plugging it into formula)

•T = Time (must be measured in years) or converted to years by dividing by 12 months

Task

Objectives:

1. Define the following terms:

Simple interest
Principal

2. Given different conditions should be able to calculate:

Simple interest
Principal
Time borrowed or invested
Rate at which the money was borrowed or invested

3. Solve problems involving simple interest.

Process

1. Lets get our practice on some examples.

https://www.youtube.com/watch?v=ZWCXrbnMN-E

2. Go to http://www.math-play.com/Simple-Interest/simple-interest-money-game.html

Play the Game and try to get a perfect score. Submit what your final score was.

3. "Buy" a car that you can afford with a monthly income of $4000. The span of the loan will be for 60 months. Consider all of your expenses and the monthly car payment with interest. Use any of the following to find a car:

www.cargurus.com

www.truecar.com

www.cars.com

- Share the name and make of your car, including the year, color and mileage. And calculate the monthly payment with a 4.0% interest rate.

- Use this website to calculate the monthly payment and total interest to be paid by the end of the loan.

http://www.calculator.net/loan-calculator.html