Simple Interest Rates Lesson

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Simple Interest Rates Lesson

• Mr. Barker
• October 17, 2013

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Warm Up 1. What is 40 increased by 10? 2.
What is the percent of decrease from 150 to
120? 3. What is 1600 decreased by 25? 4. What
is the percent of increase from 0.32 to 0.64?
44
20
1200
100
Students should have their notes outhowever,
showing work is not necessary. Review
sub-objectives.
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Money Never Sleeps

• How can someone make money without doing any
  work?
• How do banks make money?
• What is the secret to becoming a millionaire?

4
Brainstorm

• Independently think of careers in which people
  might use simple interest.
• (30 Seconds)
• With your partner make a list of careers in which
  people might use simple interest.
• (2 minutes)

5
Answers may include

• bankers
• sales representatives
• retail managers
• Salespeople
• mortgage brokers
• etc

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Vocabulary
simple interest principal rate of
interest time total at maturity
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When you deposit money into a bank, the bank pays
you interest. When you borrow money from a bank,
you pay interest to the bank.
I P ? r ? t
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Time (t)

• If time is given in months, it must be written as
  a fraction or as a decimal.
• For example, 6 months would be 6/12 years or 0.5
  years.
• How should you write 4 years and 9 months as a
  decimal?
• How should you write 2 years and 6 months as a
  fraction?

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Rate of Interest (r)

• Round to the nearest half of a percent.
• For example
• Round 4.3 to 4.5.
• Round 2.03 to 2
• Round 3.49 to 3.5
• How should we round 2.23?
• How should you round 3.99

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Finding Interest and Total Payment on a
Loan Example 1
To buy a car, Jessica borrowed 15,000 for 3
years at an annual simple interest rate of 8.9.
How much interest will she pay if she pays the
entire loan off at the end of the third year?
What is the total amount that she will repay?
First, find the interest she will pay.
I P ? r ? t Use the formula.
I 15,000 ? 0.09 ? 3 Substitute.Use 0.09 for
8.9.
I 4050 Solve for I.
Model
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Continued
Jessica will pay 4050 in interest.
You can find the total amount A to be repaid on a
loan by adding the principal P to the interest I.
P I A principal interest total
amount
15,000 4050 A Substitute.
19,050 A Solve for A.
Jessica will repay a total of 19,050 on her loan.
Model
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Example 2
To buy a laptop computer, Elaine borrowed 2,000
for 3.5 years at an annual simple interest rate
of 4.9. How much interest will she pay if she
pays the entire loan off at the end of the third
year? What is the total amount that she will
repay?
First, find the interest she will pay.
I P ? r ? t Use the formula.
I 2,000 ? 0.05 ? 3.5 Substitute.Use 0.05 for
4.9.
I 350 Solve for I.
Guided Practice-Check Student Work
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Example 2 Continued
Elaine will pay 300 in interest.
You can find the total amount A to be repaid on a
loan by adding the principal P to the interest I.
P I A principal interest total
amount
2000 350 A Substitute.
2350 A Solve for A.
Elaine will repay a total of 2350 on her
loan. 2350 is the total at maturity or the
total amount that will be paid.
Guided Practice
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Thumb Up or Thumb Down

• Everyone must show a Thumb Up or Down.
• Thumb Up if you understand how to calculate
  interest and total at maturity
• Thumb Down if you do NOT understand how to
  calculate interest and total at maturity.
• Show Thumbs Now.

Total Physical Response
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Computing Total Savings Example 3
Johns parents deposited 1000 into a savings
account as a college fund when he was born. How
much will John have in this account after 18
years at a yearly simple interest rate of 3.25?
I P ? r ? t Use the formula.
I 1000 ? 0.035 ? 18 Substitute. Use 0.035
for 3.25.
I 630 Solve for I.
The interest is 630. Now you can find the total.
Check Student Answersmark on clipboard/roster
and create subgroups
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Example 3 Continued
P I A Use the formula.
1000 630 A Substitute.
1630 A Solve for A.
John will have 1630 in the account after 18
years.
Check Student Answersmark on clipboard/roster
and create subgroups
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Homework InstructionsDue 10/18 (tomorrow)

• If I do not call your name, start the IPxRxT
  Work Sheet 1-6. Work silently and
  independently until I instruct you otherwise.
• Front row move to the back of the room if your
  name was NOT called.
• Students whose names I call, please move to the
  front row.

CHECK for understanding, read names, and pass
out homework work sheet
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Extra-Practice
Bertha deposited 1000 into a retirement account
when she was 18. How much will Bertha have in
this account after 50 years at a yearly simple
interest rate of 7.3?
I P ? r ? t Use the formula.
I 1000 ? 0.075 ? 50 Substitute. Use 0.075
for 7.3.
I 3750 Solve for I.
The interest is 3750. Now you can find the total.
Extra Guided Practice
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Extra-Practice Continued
P I A Use the formula.
1000 3750 A Substitute.
4750 A Solve for A.
Bertha will have 4750 in the account after 50
years.
Extra Guided Practice
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Closure

• What is the formula for simple interest?
• How do you calculate interest when given the
  principal, time, and interest rate of a loan?
• How do you calculate total at maturity when
  given the principal, time, and interest rate of a
  loan?

Ask students to think about each question, turn
and explain to their partner, then select a
student to answer for the class.
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Ticket out the Door Instructions

• Write your name and period at the top
• Write down all car names and prices
• Choose your favorite car then independently
  calculate the total interest the total at
  maturity for your favorite vehicle
• ROUND the interest rate!
• Raise your hand when you are finished
• Finish 1-6 on the work sheet

After giving instructions, CHECK FOR
UNDERSTANDING. Check Student Answersmark on
clipboard/roster
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2010 Ferrari California Convertible 192,000

• 2.7 for 4 years

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2009 Hummer H3 38,365

• 3.49 for 5 years

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2012 Chevy Corvette 54,525

• 3.23 for 7 years

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2011 Ford Mustang 37,605

• 2.99 for 4 years

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2011 Porsche 911 Carrera245,000

• 4.03 for 5 years

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Car Project Instructions Due 10/21 (Monday)

• In real life, you must compare different car
  loans based on interest rates and time. This
  activity will prepare you for your first car
  buying experience.
• Finish Side 1.
• Select a car and look up the price on-line or
  from an advertisement.
• For your selected car, calculate the total
  interest and total at maturity for each of the
  interest rate and time values in the table on
  Side 2.
• Circle the loan that requires the least total
  money.

CHECK FOR UNDERSTANDING