Consumer Math

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Consumer Math. Chapter 2. Consumer Arithmetic. #10. Learning Unit Objectives. Simple Interest. Calculate simple interest Calculate the total amount of a loan and the total value of an investment at the end of a special term. #10. Learning Unit Objectives. - PowerPoint PPT Presentation

Transcript of Consumer Math

Whole Numbers; How To Dissect And Solve Word ProblemsCalculate simple interest
Calculate the total amount of a loan and the total value of an investment at the end of a special term.
Simple Interest
Using the interest formula, calculate
the unknown when the other two (principal, rate, or time) are given
Simple Interest
10-*
The amount of the loan
(Face value)
Simple Interest Formula
Simple Interest (I) = Principal (P) x Rate (R) x Time (T)
Stated as a
Stated in years
Maha borrowed $30,000. The loan was for 6 months at a rate of 8%. What is interest and maturity value?
SI = $30,000 x.08 x 6 = $1,200
12
and Maturity Value
365
10-*
and Maturity Value
$40,000 x .08 x 124
365
$1,087.12
10-*
Formula - Principal
Principal = Interest
Interest (I) = Principal (P) x Rate (R) x Time (T)
Christina Jones paid the bank $19.48 interest at 9.5% for 90 days. How much did she borrow?
$19.48 .
.095 times 90 divided by 365. Do not round answer
10-*
= 10000 x 10 x 3
100
= $ 3000
= 10000+3000
=$ 13000
.
.I was getting 14.25% interest rate
What simple interest rate would allow $ 6000 to grow to an amount of $ 14550 in 10 years?
So the simple interest I= 14550 – 6000
=$ 8550
10-*
Formula - Rate
Rate = Interest
Interest (I) = Principal (P) x Rate (R) x Time (T)
Christina Jones borrowed $820.21 from the bank. Her interest is $19.48 for 90 days. What rate of interest did Christina pay?
$19.48 .
10-*
Formula - Time
Interest (I) = Principal (P) x Rate (R) x Time (T)
$19.48 .
T = $820.21 x .095 = .25
.25 x 365 = 91.25 days
Christina Jones borrowed $820.21 from the bank. Her interest is $19.48 for 9.5%. How much time does Christina have to repay the loan?
Convert years to days (assume 365 days)
10-*
Vocabulary:
Principal: an amount of money owed by an investor and held by a financial institution such as a bank.
Deposit: the act of establishing , or adding to , existing principal.
Balance: the amount of money in an account.
Interest: the amount of money you earn by leaving deposits in a bank or financial institution Interest is a percentage of your principal.
Term: the period of time an investment lasts.
10-*
Steps to answer simple interest question
Step 1. Read the problem carefully and list the information( look for the ‘key’ words)
Step 2. Find the interest
Step 3. To calculate the amount paid all together
Ahmad borrowed $ 78000 for 4 months at 12.75% pa simple interest to pay for her new house while her old one was being sold . How much interest did she pay? And how much was paid back altogether?
P = $78000
R = 12.75% or 0.1275 or 12.75
100
I= ?
= 78000 x 12.75% x 4/12
= $ 3315
= 78000+ 3315 =$81315