Page 515 - Basic College Mathematics with Early Integers

Vocabulary and Readiness Check

Use the choices below to fill in each blank. Choices may be used more than once.
total amount simple principal amount compound
# #
1. To calculate interest, use I = P R T .
r n # t
2. To calculate interest, use A = Pa1 + b .
n
3. interest is computed not only on the original principal, but also on interest already earned in
previous compounding periods.
4. When interest is computed on the original principal only, it is called interest.
5. (paid or received) = principal + interest .
6. The is the money borrowed, loaned, or invested.

FOR EXTRA HELP
6.6 Exercise Set

Objective Find the simple interest. See Examples 1 and 2.

Principal Rate Time Principal Rate Time
1. $200 8% 2 years 2. $800 9% 3 years
3. $160 11.5% 4 years 4. $950 12.5% 5 years
1 1
5. $5000 10% 1 years 6. $1500 14% 2 years
2 4
7. $375 18% 6 months 8. $775 15% 8 months
9. $2500 16% 21 months 10. $1000 10% 18 months

Solve. See Examples 1 through 3.

11. A company borrows $162,500 for 5 years at a simple 12. $265,000 is borrowed to buy a house. If the simple
interest rate of 12.5%. Find the interest paid on the interest rate on the 30-year loan is 8.25%, find the
loan and the total amount paid back. interest paid on the loan and the total amount paid
back.
13. A money market fund advertises a simple interest 14. The Real Service Company takes out a 270-day
rate of 9%. Find the total amount received on an (9-month) short-term, simple interest loan of $4500
investment of $5000 for 15 months. to finance the purchase of some new equipment. If
the interest rate is 14%, find the total amount that
the company pays back.
15. Marsha borrows $8500 and agrees to pay it back in 16. An 18-year-old is given a high school graduation
4 years. If the simple interest rate is 17%, find the gift of $2000. If this money is invested at 8% simple
total amount she pays back. interest for 5 years, find the total amount.
Copyright 2012 Pearson Education, Inc.

Objective Find the total amount in each compound interest account. See Examples 4 and 5.

17. $6150 is compounded semiannually at a rate of 14% 18. $2060 is compounded annually at a rate of 15%
for 15 years. for 10 years.

19. $1560 is compounded daily at a rate of 8% 20. $1450 is compounded quarterly at a rate of 10%
for 5 years. for 15 years.
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