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# March 1 Simple Interest

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### March 1 Simple Interest

1. 1. Interest (simple) Money paid to borrow money A fee for borrowing Money earned for lending
2. 2. Interest I=prt I = Interest principal = starting money rate = percent of interest per year time = time in years
3. 3. I=prt Example: Nat lends Issah \$100. Nat charges Issah 10% interest. Issah forgets to pay Nat back for a year! How much does Issah owe Nat? Solution I = 100 * .1 * 1 I = \$10 Issah owes Nat \$110
4. 4. I=prt Example 2: Kim borrows money from a payday loan place. They charge 25% interest. Kim borrows \$300 for 60 days. How much does she need to pay back? Solution: I = 300 * .25 * 60 ÷ 365 I = \$12.33 Kim needs to pay \$312.33 back.
5. 5. I=prt Example 3 Allen deposits \$3000 into a bank account that earns 4.5% interest. After how many months will he have earned \$500 in interest? Solution 500 = 3000 * .045 * t t = 500 ÷ (3000 * .045) t = 3.7 years * 12 months t = 44.44 months