INVESTING Suni plans to save
the $200 she received for her
birthday. The graphs shows
the average yearly rates at
three different banks.
- Calculate 2.50% of $200 to
find the amount of money
Suni can earn in one year
at Federal Credit Bank. $5
- Calculate 2.75% of $200 to
find the amount of money
Suni can earn in one year
at First Bank. $5.50
Principal is the amount of money deposited or borrowed.
Simple interest is the amount paid or earned for the use of money.
To find simple interest I, use the following formula.
Principal Time, expressed in years.
I = p rt
Interest Annual interest rate,
written as a decimal
Find Interest Earned
CHECKING Arnold has $580 in a savings account that pays 3% simple
interest. How much interest will he earn in each amount of time?
1 5 years
I = prt Formula for simple interest
I = 580 · 0.03 · 5 Replace p with $580, r with 0.03, and t with 5.
I = 87 Simplify.
Arnold will earn $87 in interest in 5 years.
2 6 months
6 months =
_6
12 or 0.5 year Write the time as years.
I = prt Formula for simple interest
I = 580 · 0.03 · 0.5 p = $580, r = 0.03, t = 0.5
I ≈ 8.7 Simplify.
Arnold will earn $8.70 in interest in 6 months.
