Math 702 Lesson 3 The Range Of Data / Lesson 4 Calculating Interest For Months Worksheet Page 7
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10Lesson 4
To find interest on $1,500 in a 42-month CD earning 5.25%, first convert 42 months to years by
dividing by 12. Then use the simple interest formula, i=prt.
Convert months to years:
42 ÷ 12 = 3.5 years
Use the formula: i = prt
Substitute numbers for the variables: i = $1,500 × 0.0525 × 3.5
Solve:
i = $275.63
The CD will earn $275.63 in forty-two months.
Add the principal and the interest to find out how much the CD will be worth when it matures.
$1,500 + 275.63 = $1,775.63
Applying the associative property to the interest formula will often simplify the calculations so
you can solve part of the problem mentally.
Find the interest due on $40,000 borrowed at 8% interest for 6 years.
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Think:
of 8% is 1%, or 0.01
Find 1% of $40,000
0.01 × 40,000 = 400
Calculate: $400 × 6 = $2,400
1 1
Find the interest due on $12,000 borrowed at 5
% for 3 months.
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1
12
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Convert months to years:
3
=
(Think:
of 12,000 is 3,000.)
Calculate:
3,000 × 0.055 = $165
H H
Find the interest gained on $250 in a savings account earning 2
% for 3 years.
Use the formula:
i = prt
Substitute numbers for the variables:
i = $250 × 0.0275 × 3
(Think: 3 times 250 is 750.)
750 × 0.0275 ≈ $20.63
Calculate:
1. At the end of Eva’s first year of teaching, she put $1,000 into
a 30-month CD earning 4.5%. She is planning to use the
money this summer to travel to Costa Rica to volunteer for
six weeks in an orphanage. How much will the CD be worth
when it matures?
2. Eva put $1,407.32 in a savings account that pays 2% inter-
est. How much interest did the account earn in one month?
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