Interest

STS

1. Identify and underline Principal, Rate and Time.

2. Substitute values into the formula SI = PRT to find

simple interest.

3. Substitute values into the formula TA = P(1+R)T to find

total amount in compound interest.

Money IS NOT FREE TO
BORROW

Examples

SIMPLE INTEREST

Jerry borrowed $4,000 for 5
years at 6% simple interest rate.
How much interest is that?

SI = PRT

COMPOUND INTEREST

Alex borrowed $2,000 for 2 years
at 5% compound interest rate.
How much interest is that?

TA in CI = P(1+R)T

Group Work

SIMPLE INTEREST

Jean has a loan of $2000. The rate
of simple interest is 8% per year.

a) How much interest will Jean have

to pay after 1 year?

b) How much interest will Jean have

to pay after 3 years?

c)

Find the total amount Jean have
to pay at the end of 3 years.

COMPOUND INTEREST

Jean has a loan of $2000. The rate
of compound interest is 8% per
year.

a) How much interest will Jean have

to pay after 1 year?

b) How much interest will Jean have

to pay after 3 years?

c)

Find the total amount Jean have
to pay at the end of 3 years.

Differences BETWEEN
Simple Interest &
Compound Interest

DIFFERENCES

SIMPLE INTEREST

› Interest for all years is same.

› SI is smaller than CI

› Formula is SI = PRT

› Principal is the same every

year

COMPOUND INTEREST

› Interest for all years is different

› CI is larger than SI

› Formula is P(1+R)T

› Principal is not same every

year. Amount at the end of one
year is the principal for the next
year.

Classwork
- Read STS

Thank you