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

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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 ...
View Full Document

Page1 / 2

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online