If Mr. Campton should let Mr. Barker have $1000 in money for a year at 6%, how much would Mr. Barker pay for its use? Money paid for the use of money is interest. The sum of money for whose use interest is paid is the principal. The per cent of the principal paid each year for interest is the rate. The legal rate is the rate established by law in the state where the money is loaned. The legal rate in most states is 6%. What is the legal rate in the state in which you live? When no rate is mentioned, the legal rate is understood. Mr. Stevens borrowed $3000 for one year at 5%. At the end of the year he paid the $3000 and the interest. What amount did he pay? The sum of the principal and the interest is the amount. 15. $450 at 6% for 1 year; of a year; of a year; 13 years. 16. $600 at 5% for 1 year; of a year; & of a year; 18 years. 17. What part of a year is 6 months? 3 months? 9 months? 4 months? 8 months? 2 months? 10 months? 1 month? 5 months? 7 months? 11 months? 18. What is the interest on $400 at 6% for 6 months? 3 months? 9 months? 4 months? 8 months? 2 months? 10 months? 1 month? 5 months? 7 months? months? Find the interest and the amount of: 19. $800 for 6 months at 5% 20 11 WRITTEN PROBLEMS 1. What is the interest and the amount of $576 for 2 years 7 months at 5% ? Find the interest and the amount of: 2. $490 for 1 year 9 months at 7% 3. $867 for 2 years + months at 8% 4. $1265 for 3 years 5 months at 6% X5. $1468 for 4 years 6 months at 5% THE ONE-DOLLAR METHOD In computing simple interest a year is generally regarded as 12 months of 30 days each. When the time is given in years, months, and days, or in months and days, the following method may be used: $1 at interest at 6% will earn Find how much $1 will earn at 6% in the following 8. What is the interest on $1 for 2 years 7 months 17 days at 6%? On $348? 19. Find the interest on $342 for 3 months 10 days at 6%. 20. Find the interest and the amount of $385 for 3 months 20 days at 5%. 21. The interest of any principal at 5 % is what part of the interest at 6% ? 22. What part of the interest at 6 % is the interest at 3%? 4%? 2%? 1%? THE BANKERS' METHOD When the time is given in days, the following method, commonly called the bankers' method, may be used. Since the interest at 6% of any principal for 60 days is .01 of itself, first find the interest for 60 days, and then take such parts of this interest as may be necessary. Thus, in finding the interest at 6% of $360 for 98 days: 60 days + 30 days + 5 days + 3 days $3.60 interest for 60 days = = 1.80 interest for 30 days (of interest for 60 days) $5.88 = 1. How much will $450 earn in 1 year 3 months |