# Interest

Document Sample

```					Using Percents to Calculate Interest – (9.8)

Interest is the amount earned or paid for the use of money.
   With savings accounts, the bank pays you interest for keeping your money
with them.
   With a loan, you pay interest for borrowing the money.

Example 1
You borrow \$50 at 4% annual interest. How much will you owe in 1 year?
Step 1 : Calculate 4% of \$50

Step 2: Add the interest to the original loan

Example 2
You deposit \$500 into a savings account that earns 6% annual interest. What will
the account’s balance be after 1 year? 2 years? 6 months?

Guided Practice
1) You put \$750 into a savings account that earns 2% annual interest. What
will the account’s balance be after 1 year? 3 years?

2) You borrow \$4500 to buy a car at an annual interest rate of 9%. How much
interest will you end up paying in 4 years?
Using Percents to Calculate Interest – (9.8)

Example 3
You put \$750 into a certificate of deposit. Your annual interest rate is 4%. You
receive a check for the interest at the end of each year. How long will it take to
earn \$150 in interest?

Step 1: Find out how much interest you would earn in one year.

Step 2: Divide \$150 by the amount you would earn in one year.

Guided Practice
3) You put \$800 into a certificate of deposit. Your annual interest rate is 5%.
You receive a check for the interest at the end of each year. How long will
it take to earn \$200?

4) You put \$300 into an account that pays 5% annual interest. Your brother
puts \$400 into an account that pays 2% annual interest. Who has more
money at the end of 10 years? Who has earned more interest? Show your
work or explain.

5) If you borrow money, would you want a higher or lower interest rate? If
you open a savings account, would you want a higher or lower interest rate?