Docstoc

Interest

Document Sample
Interest Powered By Docstoc
					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?
      Explain your choices.
Using Percents to Calculate Interest – (9.8)

				
DOCUMENT INFO