Digits, Grade 8, Volume 2, Homework Helper

# Unit F: Personal Financial Literacy

## Topic 13: Investing and Financing

### 13-1: Calculating Interest

#### Key Concept

When you deposit money in a bank account, the bank pays you interest for the right to use your money.

Earning Interest An account earns interest at regular intervals, such as yearly, monthly, or weekly. The length of time is the interest period.

The amount of money deposited in an account is the principal. The balance of an account is the sum of the principal and the accumulated interest. Simple Interest Simple interest is interest paid only on an account's principal. Simple interest is calculated as a percent of the principal. The percent is the interest rate.

table with 2 rows and 1 column , row1 column 1 , . cap simplecap interestcap formula , row2 column 1 , table with 2 rows and 7 columns , row1 column 1 , cap interest , column 2 equals , column 3 principal , column 4 middle dot , column 5 rate , column 6 middle dot , column 7 time , row2 column 1 , slash , column 2 equals , column 3 p , column 4 middle dot , column 5 r , column 6 middle dot , column 7 t , end table , end table

Time t is the length of time the money is in the account. When the interest rate r is an annual interest rate, t is in years.

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