Download presentation

1
**8.4 Simple and Compound Interest**

CH 8, section 8.4

2
**Simple Interest I=PRT paid on average balance (principal)**

Interest = Principal x Rate x Time calculate annually paid on average balance (principal) Ex. Deposit of $100 at 6% P= $100 R= 6% T= 1 year I= 100 x .06 x 1= $6

3
**Try a couple… You deposit $100 at 12% for 1 year**

You deposit $500 at 3.25% for 2 years You deposit $100 at 8% for 6 months (note a month is considered 1/12 of a year)

4
Compound Interest When you earn interest on both the principal (ie. Your initial deposit) and the interest. EX. After earning $6 in interest on your $100 investment, you allow that money to remain invested, making your principal for the following year $106.

5
**Types of compounding Can be done Annually Semi annually Quarterly**

Monthly Daily Note: the more often your money compounds, the more interest you earn.

6
**Examples for compound interest**

Refer to pages of your Economic Education for Consumers book to review samples of compound interest

7
Rule of 72 Tells you how long it will take an investment to double in value. EX. At 10%, it will take my investment 7.2 years to double in value. 72/10= 7.2

Similar presentations

OK

Bellringer Calculate the Simple Interest for #s 1 and 3 and the Total cost for #2. 1.$1800 at 3.2% for 4 years. 2. $17250 at 7.5% for 6 years. 3. $3,650.

Bellringer Calculate the Simple Interest for #s 1 and 3 and the Total cost for #2. 1.$1800 at 3.2% for 4 years. 2. $17250 at 7.5% for 6 years. 3. $3,650.

© 2017 SlidePlayer.com Inc.

All rights reserved.

Ads by Google

Ppt on aircraft emergencies Ppt online form date Ppt on industrial development in gujarat Ppt on disk formatting tools Ppt on transformational leadership theory Ppt on reflection of light for class 7 Ppt on power generation using footsteps of jesus Ppt on relations and functions for class 11th chemistry Ppt on tourism and travel Ppt on resistance temperature detector definition