Related Topics:

Lesson Plans and Worksheets for Algebra I

Lesson Plans and Worksheets for all Grades

More Lessons for Algebra I

Common Core For Algebra I

Examples, solutions, and videos to help Algebra I students compare the rate of change for simple and compound interest and recognize situations in which a quantity grows by a constant percent rate per unit interval.

### New York State Common Core Math Algebra I, Module 3, Lesson 4

Worksheets for Algebra I, Module 3, Lesson 4 (pdf)

Lesson Plans and Worksheets for Algebra I

Lesson Plans and Worksheets for all Grades

More Lessons for Algebra I

Common Core For Algebra I

Examples, solutions, and videos to help Algebra I students compare the rate of change for simple and compound interest and recognize situations in which a quantity grows by a constant percent rate per unit interval.

Lesson Summary

**Simple Interest**: Interest is calculated once per year on the original amount borrowed or invested. The interest does not become part of the amount borrowed or owed (the principal).

**Compound Interest**: Interest is calculated once per period on the current amount borrowed or invested. Each period, the interest becomes a part of the principal.

Exit Ticket

A youth group has a yard sale to raise money for a charity. The group earns $800 but decides to put its money in the bank for a while. Calculate the amount of money the group will have if:

a. Cool Bank pays simple interest at a rate of 4%, and the youth group leaves the money in for 3 years.

b. Hot Bank pays an interest rate of 3% compounded annually, and the youth group leaves the money in for 5 years.

c. If the youth group needs the money quickly, which is the better choice? Why?

Problem Set Sample Solutions1. $250 is invested at a bank that pays 7% simple interest. Calculate the amount of money in the account after 1 year, 3 years, 7 years, and 20 years.

2. $325 is borrowed from a bank that charges 4% interest compounded annually. How much is owed after 1 year, 3 years, 7 years, and 20 years?

3. Joseph has to $10,000 invest. He can go to Yankee Bank that pays 5% simple interest or Met Bank that pays 4% interest compounded annually. After how many years will Met Bank be the better choice?

Try the free Mathway calculator and
problem solver below to practice various math topics. Try the given examples, or type in your own
problem and check your answer with the step-by-step explanations.

We welcome your feedback, comments and questions about this site or page. Please submit your feedback or enquiries via our Feedback page.