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ZingPath: Calculations with Percents

Simple Interest

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Lesson Focus

Simple Interest

Pre-Algebra

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Students solve simple interest problems while visiting a bank.

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Now You Know

After completing this tutorial, you will be able to complete the following:

  • Solve percent problems in contextual situations using the simple interest formula.

Everything You'll Have Covered

In this Activity Object, students use the simple interest formula to solve percent problems involving investments and loans. Be sure to review the following pre-requisite concepts with the class before starting the Activity Object.

Simple Interest is the most basic kind of interest. When someone lends money to someone else, the borrower usually pays a fee to the lender. This fee is the simple interest. The amount of simple interest paid each year is a fixed percentage of the amount borrowed or lent at the start. It is just the amount of money paid on a loan. In general, it is charged for borrowing money for short periods of time.

  • formula for simple interest - I = prt where I is the simple interest, p is the principal, r is the rate of interest, and t is the period of time
  • percent and decimal equivalents - to convert a decimal to a percent, multiply by 100 and to convert a percent to a decimal, divide by 100For example, Convert 0.75 to a percent.0.75 100 = 75%
  • solving equations - For example,Find the simple interest for 2 years at a rate of 6% on $1,500. Solution:Step 1: Simple Interest = prt [Formula for simple interest]Step 2: = 1500 0.06 2 [Substitute p = 1500, r = 0.06, t = 2 Use 0.06 for 6%] Step 3: = $180 [Simplify.] Step 4: The simple interest on $1500 for 2 years is $180

The following key vocabulary terms will be used throughout this Activity Object:

  • interest rate - the rate in which an amount of money borrowed (or loaned) increases over time
  • principal - the amount of money invested or borrowed
  • simple interest - the interest calculated only on the principal regardless of the interest earned so far

Tutorial Details

Approximate Time 15 Minutes
Pre-requisite Concepts formula for simple interest, interest rate, multiplication of decimals, percent and decimal equivalents, principal, simple interest, solving equations
Course Pre-Algebra
Type of Tutorial Problem Solving & Reasoning
Key Vocabulary problems, rate, simple interest