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A R I T H M E T I C

BANKING PROBLEMS

Lesson 30 Section 2

2.	In a banking problem, what is the Amount and what is the Base?

2.	The Amount is the amount of interest the bank pays you when you make a deposit into an interest-bearing account.

	The deposit is the Base.

The Interest is a Percent of the Deposit

Example 1. Eric deposited $1200 into a savings account where the rate of interest was 2½% annually. In one year, how much interest will he earn?

Solution. The question is:

How much is 2½% of $1200?

The deposit, $1200, is the Base.

Now,

1% of $1200 is $12.00. (Lesson 3, Question 8 )

Therefore, 2½% is

2½ × 12 = 24 + 6 = 30. (Lesson 26, Question 2)

He will earn $30 interest.

Example 2. Harriet wants to earn $130 in interest. The bank is paying 3¼% interest. How much should she deposit?

Solution. $130 is 3¼% of what deposit -- of what Base?

With a calculator, press

See the answer:

4000

Example 3. Gerald put $800 into a CD (Certificate of Deposit) and received $42 in interest. What was the rate of interest?

Solution. The question is:

$42 (the interest) is what percent of $800 (the deposit)?

Write the fraction

42
800

To express that as a percent, let us complete this proportion:

42
800

?
100

To make 800 into 100, divide by 8. Divide 42 by 8 also:

"8 goes into 42 five (5) times (40) with 2 left over."

The rate of interest was 5

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4

Please "turn" the page and do some Problems.

Continue on to the next Lesson.

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