2 InterestDefinition: A charge for borrowed money generally a percentage of the borrowed amount.Context: A person makes a deposit with a financial institution, which promises a certain rate of interest per year, paid after specified intervals of time.This is a growth problem!Examples: Savings account, loans, credit cards, etc.
3 Compound InterestDefinition: Interest charged on both the principal amount as well as on the interest already earned.When entering an equation into the calculator do not forget the parentheses.
4 Compound Interest Example Find an equation for the following context if the input is the number of years:Fred invests $12,000 in an account that offers 3.2% annual interest compounded semiannually.2 times a year..3.2% =0.032.21Decimal RateThe initial valueNumber of Intervals
5 Compound Interest Example Continued…Fred invests $12,000 in an account that offers 3.2% annual interest compounded semiannually. If there are no withdrawals, how much money is in the account after 5 years?x = 5 years