# 3-1 - 3-1 Simple Interest You invest \$100.00 for at 10...

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Unformatted text preview: 3-1 Simple Interest You invest \$100.00 for at 10% simple interest. How much do you have at the end of 2 years? We can do this in our heads: • 10% of \$100 is \$10 • that's \$10 interest earned per year • for 2 years for a total of \$20 interest • plus the \$100 original investment . . . • for a new amount of : \$120 P = principal invested (also called present value) r = annual interest rate (expressed as a decimal) t = time in years I = interest earned A = total amount after t years (also called future value) (\$100) (10%) (2 years) (\$20) (\$120.00) Simple Interest formulas I = Prt A = P + Prt = P(1 + rt) 3-1 p.1 If you know any 3 of the variables, the formula (plus some algebra) can be used to solve for the 4th variable: Example: \$100 is invested (simple interest) for 10 years, and the investment doubled in value. What was the interest rate? The equation: 200 = 100(1 + r(10)) Solve: r = .10 (10%) 3-1 p.2 ...
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## This note was uploaded on 12/11/2011 for the course MATH 1324 taught by Professor Staff during the Spring '11 term at Austin Community College.

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3-1 - 3-1 Simple Interest You invest \$100.00 for at 10...

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