The money the bank gives you is called interest. The percentage the bank uses to calculate how much money to give you is called the rate, or interest rate. The amount of money you put into the account is called the principle.

To calculate how much interest you earn, use the formula for simple interest:

Simple Interest = Principle × Rate × Time
which can also be written as I = PRT

Example 1:

Answer the following questions involving simple interest. Input all answers to the nearest dollar

Interest Rate: 9% each year Starting Balance: $218 Time Passed: 15 years How much interest has accrued if we are using simple interest? What is the new total balance?

Interest:   Total balance:

Use the simple interest formula to find the amount of interest earned.

Interest	=	Principle × Interest Rate × Time
	=	$218 × 9% per year × 15 years
	=	$294.30

New balance	=	Original balance + Amount of interest earned
	=	$218 + $294.30
	=	$512.30

Rounded to the nearest dollar, the answer is   Interest:   Total balance: