The document discusses simple and compound interest, including formulas and examples. It provides definitions of key terms like principal, interest rate, and simple vs. compound interest. Examples are given for calculating simple interest earned on deposits over time, as well as compound interest using formulas to find the balance on an account with yearly and semiannual interest compounding. Students are assigned homework problems involving calculating simple and compound interest.

1. 7.7 simple and compound interest
January 21, 2014
Find each amount.
Solve for p.
1. 6% of $400
4. I = prt
2. 4.5% of $700
5. 3p + 4 = k
3. 5.5% of $325
Bellwork
Objective: calculate simple and compound interest
Mar 11­1:10 PM
HW pg. 374 #1­12
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2. 7.7 simple and compound interest
January 21, 2014
principal ­ money first deposited
interest ­ money you earn on principal
interest rate ­
simple interest ­ only paid on principal
Simple Interest Formula
I = prt
Mar 11­1:14 PM
HW pg. 374 #1­12
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3. 7.7 simple and compound interest
January 21, 2014
Suppose you deposit $400 in a savings account.
The interest rate is 5% per year.
Find the simple interest earned in six years.
Find the total of principal plus interest.
Find the interest earned in three months.
Find the total principal plus interest.
Mar 11­1:16 PM
HW pg. 374 #1­12
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4. 7.7 simple and compound interest
January 21, 2014
Compound interest ­ when a bank pays interest on the principal and
on the interest an account has earned.
You deposit $400 in an account that earns 5% interest
compounded annually. What is the balance in your account after 4
years? In your last calculation, round to the nearest cent.
Principal at
Beginning of Year
Interest
Balance
Year 1
Year 2
Year 3
Year 4
Mar 11­1:17 PM
HW pg. 374 #1­12
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5. 7.7 simple and compound interest
January 21, 2014
Compound­Interest Formula
number of interest periods
B = p(1 + r)n
final
balance
principal
interest
rate
Find the balance on a deposit of $1,000 that earns 6%
interest compounded semiannually for 5 years.
Mar 12­8:00 AM
HW pg. 374 #1­12
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6. 7.7 simple and compound interest
January 21, 2014
Find the balance for each account.
Amount deposited: $900, annual interest: 2%, time: 3
years
a) compounded annually
b) compounded semiannually
Mar 12­8:05 AM
HW pg. 374 #1­12
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7. 7.7 simple and compound interest
January 21, 2014
HW pg. 374 #1­12
Mar 11­1:17 PM
HW pg. 374 #1­12
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