{"id":4611,"date":"2023-06-16T02:08:31","date_gmt":"2023-06-16T02:08:31","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/?post_type=chapter&#038;p=4611"},"modified":"2025-08-27T00:37:06","modified_gmt":"2025-08-27T00:37:06","slug":"simple-and-compound-interest-apply-it-1","status":"web-only","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/chapter\/simple-and-compound-interest-apply-it-1\/","title":{"raw":"Simple and Compound Interest: Apply It 1","rendered":"Simple and Compound Interest: Apply It 1"},"content":{"raw":"<section class=\"textbox learningGoals\">\r\n<ul>\r\n\t<li>Calculate simple interest and compound interest<\/li>\r\n\t<li>Determine annual percentage yield (APY) based on given interest scenarios<\/li>\r\n\t<li>Solve for time in compound interest calculations<\/li>\r\n<\/ul>\r\n<\/section>\r\n<h2>Unleashing Financial Success: Mastering Interest Calculations with Kalia<\/h2>\r\n<p>We invite you to step into the shoes of Kalia, a financially savvy individual who believes in the power of understanding how her money grows and how loan interests are calculated. Kalia knows, oftentimes, there are purchases that must be made that require the use of a loan. It could be a car, home, or even braces for her child. Whether saving or borrowing money, Kalia knows it is important to understand the interest and how it\u2019s calculated.<\/p>\r\n<center>\r\n[caption id=\"attachment_6843\" align=\"aligncenter\" width=\"500\"]<img class=\"wp-image-6843\" src=\"https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-300x200.jpg\" alt=\"A loan agreement\" width=\"500\" height=\"333\" \/> Figure 1. Help Kalia with her loan agreement calculations[\/caption]\r\n<\/center>\r\n<h3>Simple Interest<\/h3>\r\n<p>To start, let's imagine Kalia has a loan with a simple interest rate of [latex]4.5\\%[\/latex] for [latex]5[\/latex] years.<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9621[\/ohm2_question]<\/section>\r\n<p>Having explored the interest calculation, let's now find out how Kalia would determine the final amount due on her loan.<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9622[\/ohm2_question]<\/section>\r\n<p>For a practical example, let's see how Kalia would calculate her total dues if she borrowed [latex]$2,000[\/latex] at [latex]3\\%[\/latex] for [latex]3[\/latex] years.<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9623[\/ohm2_question]<\/section>\r\n<p>Loans or savings might not always span complete years. So, how would Kalia account for months in her interest calculations?<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9624[\/ohm2_question]<\/section>\r\n<p>In another scenario, Kalia has been charged [latex]$70[\/latex] in interest for [latex]6[\/latex] months on a [latex]$4000[\/latex] loan. Let's find out the interest rate on this loan.<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9625[\/ohm2_question]<\/section>","rendered":"<section class=\"textbox learningGoals\">\n<ul>\n<li>Calculate simple interest and compound interest<\/li>\n<li>Determine annual percentage yield (APY) based on given interest scenarios<\/li>\n<li>Solve for time in compound interest calculations<\/li>\n<\/ul>\n<\/section>\n<h2>Unleashing Financial Success: Mastering Interest Calculations with Kalia<\/h2>\n<p>We invite you to step into the shoes of Kalia, a financially savvy individual who believes in the power of understanding how her money grows and how loan interests are calculated. Kalia knows, oftentimes, there are purchases that must be made that require the use of a loan. It could be a car, home, or even braces for her child. Whether saving or borrowing money, Kalia knows it is important to understand the interest and how it\u2019s calculated.<\/p>\n<div style=\"text-align: center;\">\n<figure id=\"attachment_6843\" aria-describedby=\"caption-attachment-6843\" style=\"width: 500px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-6843\" src=\"https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-300x200.jpg\" alt=\"A loan agreement\" width=\"500\" height=\"333\" srcset=\"https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-300x200.jpg 300w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-1024x683.jpg 1024w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-768x512.jpg 768w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-1536x1024.jpg 1536w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-2048x1366.jpg 2048w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-1200x800.jpg 1200w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-65x43.jpg 65w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-225x150.jpg 225w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14145858\/pexels-rdne-stock-project-7841821_50-350x233.jpg 350w\" sizes=\"(max-width: 500px) 100vw, 500px\" \/><figcaption id=\"caption-attachment-6843\" class=\"wp-caption-text\">Figure 1. Help Kalia with her loan agreement calculations<\/figcaption><\/figure>\n<\/div>\n<h3>Simple Interest<\/h3>\n<p>To start, let&#8217;s imagine Kalia has a loan with a simple interest rate of [latex]4.5\\%[\/latex] for [latex]5[\/latex] years.<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9621\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9621&theme=lumen&iframe_resize_id=ohm9621&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<p>Having explored the interest calculation, let&#8217;s now find out how Kalia would determine the final amount due on her loan.<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9622\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9622&theme=lumen&iframe_resize_id=ohm9622&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<p>For a practical example, let&#8217;s see how Kalia would calculate her total dues if she borrowed [latex]$2,000[\/latex] at [latex]3\\%[\/latex] for [latex]3[\/latex] years.<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9623\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9623&theme=lumen&iframe_resize_id=ohm9623&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<p>Loans or savings might not always span complete years. So, how would Kalia account for months in her interest calculations?<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9624\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9624&theme=lumen&iframe_resize_id=ohm9624&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<p>In another scenario, Kalia has been charged [latex]$70[\/latex] in interest for [latex]6[\/latex] months on a [latex]$4000[\/latex] loan. Let&#8217;s find out the interest rate on this loan.<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9625\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9625&theme=lumen&iframe_resize_id=ohm9625&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n","protected":false},"author":23,"menu_order":23,"template":"","meta":{"_candela_citation":"[{\"type\":\"copyrighted_video\",\"description\":\"Close Up Photo of an Agreement on a Paper\",\"author\":\"RDNE Stock project\",\"organization\":\"Pexels\",\"url\":\"https:\/\/www.pexels.com\/photo\/close-up-photo-of-an-agreement-on-a-paper-7841821\/\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":89,"module-header":"apply_it","content_attributions":[{"type":"copyrighted_video","description":"Close Up Photo of an Agreement on a Paper","author":"RDNE Stock project","organization":"Pexels","url":"https:\/\/www.pexels.com\/photo\/close-up-photo-of-an-agreement-on-a-paper-7841821\/","project":"","license":"arr","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4611"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/users\/23"}],"version-history":[{"count":12,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4611\/revisions"}],"predecessor-version":[{"id":15748,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4611\/revisions\/15748"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/parts\/89"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4611\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/media?parent=4611"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapter-type?post=4611"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/contributor?post=4611"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/license?post=4611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}