This document discusses simple interest, providing the definition, formula, and examples of calculating interest earned, time to earn a given amount of interest, and maturity value. Simple interest is interest paid only on the principal amount, not on accumulated interest. The formula for simple interest is I = PRT, where I is interest, P is principal, R is the annual interest rate as a decimal, and T is time in years. Examples show calculating interest earned on $200 at 4% for 1.5 years ($12) and the time needed to earn $15 on $300 at 4% (1.25 years). Maturity value is the total value at a specific date, calculated as principal plus interest using the formulas S =

1. SIMPLE INTERESTSince this section involves what can happen to your money, it should be of INTEREST to you!

2. IMPLE INTEREST DEFINITIONInterest paid on the principal only and NOT on any accumulated interest

3. IMPLE INTEREST FORMULAAnnual interest rateInterest paidI = PRTTime (in years) Principal(Amount of money invested or borrowed)

4. If you invested $200.00 in an account that paid simple interest of 4%, find the interest earned after 112 years. enter in formula as a decimalI = PRTI = (200)(0.04)(1.5)I = $12

5. Solving for TimeIf you invested $300.00 in an account that paid simple interest, find how long you’d need to leave it in at 4% interest to make $15.00.enter in formula as a decimalI = PRT15 = (300)(0.04)T1.25 yrs = T

6. Maturity ValueThe Value of an asset at a specific date

7. Variables for Maturity ValueMVFVASFuture ValueAmount

8. Calculating Maturity ValueS = Principal + InterestS= P + I

9. ExampleIf you invested $200.00 in an account that paid simple interest of 4%, find the maturity value after 112 years. S = Principal + InterestS = P + IS = P + PRTS = 200 + (200)(.04)(1.5)S = 200 + 12S = $212

10. Calculating Maturity ValueS = P (1+rt)

11. ExampleIf you invested $200.00 in an account that paid simple interest of 4%, find the maturity value after 112 years. S = P(1+rt)S = 200(1+.04•1.5) S = 200(1.06)S = $212