SIMPLE INTEREST Simple Interest Interest = Principal-Rate-Time I= Prt = Original Amount invested - Annual Interest Rate - Time in YEARS Total Amount = Original Amount + Interest A=P+I =P+Prt =P(+rt) Example 1 $3000 is invested for 1 year at a rate of 5%. How much interest is earned? What is the total amount after | year? What are we being asked to find? The Interest Amount. Given: Rate = 5% per year = .05 per year Original Amount Invested = $3000 Interest = $3000 + (.05/yr) - (1 yr) = $150 Total Amount = Original Amount + Interest = $3000 + $150 Example 2 To start a carpet-cleaning business, a couple borrows $5,500 to purchase equipment and supplies. If the loan has a 14% interest rate, how much must they repay at the end of the 90-day period? What are we being asked to find? How much they repay. Is that only the interest? How much they repay = Interest = Original Amount - Interest Rate - Time in YearsCompound Interest This is when interest is earned on interest previously earned, not just on the original amount. Total Amount Earned with Compound Interest nt A= wa + 5) n r =annual interest rate expressed in decimal form. t= time in years n=number of compoundings in one year. If compounded annually, n = 1 If compunded semi - annually, n = 2 If compouneded monthly, m = 12 If compounded weekly, n = 52 If compunded daily n = 360Simple Interest, Math worksheet for Grade 7 at myTestBook.com Page | of 2 : Grade: __ Date: Name: (vane) (aa Instructions: [Answer the following questions. Question 1 Question 6 Ryan deposited $2,000 in a saving account at the interest rate of 4% per year. How much simple interest will he earn in 5 years? A $800 B. $1,000 c. $450 D. $400 Question 2 Garcia borrowed $4,000 from his cousin Susan at the rate of 8% per annum. He repaid the amount after two years. How much did he repay? A $640 B. $6,640 Cc. $4,640 D. $3,360 Question 3 Tracy put $3,500 into an investment yielding 4.5% annual interest. She left the money in for 8 years, How much interest does she get in those 8 years? A. $1,260 B. $4,760 c. $2,240 D. $1,860 Question 4 Anna invested $2,500 at an annual rate of 5%. How long will it take until Anna earns $1,125 in interest? A. Syears B. 8 years C. 10 years D. 9 years Question 5 Jerry invested $1500 in an account that paid him 8.25% simple interest, what will the balance of his account be after 6 years? A. $742.50 B. $2242.50 Cc. $2150 D. $3256.55 Mr. Peterson wrote a check of $7,820 to pay off a loan, which was given to him at a rate of 5% simple interest for 3 years. How much money did he borrow originally? A. $5,400 B. $6,800 Cc. $3,240 D. = $14,620 Question 7 If $3,840 is invested in an account at 5% annual simple interest, how long will it take the account balance to grow to $4,800? A. 12years B. 6years Cc. Syears D. Byears Question 8 Principal (p) = 1500, Rate (r) = 7%, Time (t) = 8 years. Calculate the Interest. A. $840 B. $1200 c. $2,340 D. $660 Question 9 Jack deposited $1400 in his bank account After 3 years, the account is worth $1,694. Find the simple interest rate the account eamed, A. 5% B. 8% C. 7.25% D. 7% Question 10 Principal = 360, Interest = $17.55, Time = 9 months. Calculate the Interest Rate. A 6% B. Cc 6.5% DB. Free Worksheets From myTestBook com —~ © myTestBook.com, Inc. POO} Gay Vis VLG ae The ¥E VE al mesvy htto://www.mytestbook.com/worksheet.aspx?test id=13078grade=7&subject=Math&topic.., 4/8/2014Date lame Problem solving with compound interest dus eran To find compound interest over a course of several years, use the formula: Polynomials ‘d= Plt}, where ds the balance, Ps the principal, ris the annual interest rate, and tis the number of years. find the balance after 5 years i $1000 is deposited into an account thet pays 5% annual interest compounded yearly. an pert Use the compound interest formula. = 1000(1 + 0.05)* substitute the given valves for each variable. = 1000(1.05)° Use a calculator to solve. = $1,276.28 Round batance to the nearest cent. ‘Thus, the balance after 5 years Is $1,276.28. solve each problem for is unknown, Round to the nearest cent, 1. Aprincipal of $150 is deposited In an account that pays 8% interest compounded yearly. Find the balance of the account after 3 years. 2, How much should you depostt into an account that pays 6% interest compounded yearly to have a belance of $900 after § years? 3. $1,500 fs deposited into on account that pays 6.5% Interest compounded yearly, What ls the balance after 4 years? 4, How much do you need to depost Into your account that pays 79% Interest compounded yearly fo have a baldince of $2,600 after 8 years? 6. Jotin’s bonus this quarter was for $1,250. If he put It Into an account that pays 8% Interest ‘compounded yearly, what would his balance be after 3 years? Is this more oF {ess than olance offer 5 years ithe put It into an account that pays 5% Interest compounded yearly? What is the difference? © Carton-Delota CD-4324 84 ae Algebra 4 6 c@mainat, Wak @