Basic Mathematics for College Students

6.5 Interest 559

88. SALES TAX The state sales tax rate in Kansas
    is 5.3%. Estimate the sales tax on a purchase of
    $596.


89. VOTING On election day, 48% of the 6,200 workers
    at the polls were volunteers. How many volunteers
    helped with the election?


90. BUDGETS Each department at a college was asked
    to cut its budget by 21%. By how much money should
    the mathematics department budget be reduced if it
    is currently $4,715?

WRITING

91. Explain why 200% of a number is twice the number.


92. If you know 10% of a number, explain how you can
    find 30% of the same number.
    93. If you know 10% of a number, explain how you can
    find 5% of the same number.
    94. Explain why 25% of a number is the same as of the
    number.

REVIEW

Perform each operation and simplify, if possible.

95. a. b.

c. d.

96. a. b.

c. d.

7

15



7

18

7

15



7

18

7

15



7

18

7

15



7

18

5

6



1

2

5

6



1

2

5

6



1

2

5

6



1

2

14

SECTION 6.5

Interest

When money is borrowed, the lender expects to be paid back the amount of the loan
plus an additional charge for the use of the money. The additional charge is called
interest.When money is deposited in a bank, the depositor is paid for the use of the
money. The money the deposit earns is also called interest. In general,interest is money
that is paid for the use of money.

Objectives

1 Calculate simple interest.

2 Calculate compound interest.

1 Calculate simple interest.

Interest is calculated in one of two ways: either as simple interestor as compound
interest.We begin by discussing simple interest. First, we need to introduce some key
terms associated with borrowing or lending money.

• Principal:the amount of money that is invested, deposited, loaned, or
  borrowed.


• Interest rate:a percent that is used to calculate the amount of interest to be
  paid. The interest rate is assumed to be per year (annual interest) unless
  otherwise stated.


• Time:the length of time that the money is invested, deposited, or borrowed.
  The amount of interest to be paid depends on the principal, the rate, and the time.
  That is why all three are usually mentioned in advertisements for bank accounts,
  investments, and loans, as shown below.

Our

Accounts

Rise to

New

Heights

COUNTY NATIONALBANK

Stop by a branch today

$5,000

minimum

4.75%

Time: 13

months

$100,000

6.375%

Time 30-year fixed

Home Loan

FoothillFinancial

Group

Serving the

community for over

40 years

Rate

Principal