2.2.4 Applications of Percent (continued) Example 2 Finance Application

Interest is the amount of money earned when saving or investing money. Interest is also the amount of money charged for borrowing money. Principal is the amount of money invested or borrowed. Simple interest is interest paid only on the principal. The formula for simple interest is I = Prt , where I is the simple interest earned when a principal P is invested (or borrowed) for t years at interest rate r .

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