What is Interest? Interest is the amount earned on an investment or an account. Annually: A = P(1 + r) t P = principal amount (the initial amount you borrow.

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Presentation transcript:

What is Interest? Interest is the amount earned on an investment or an account. Annually: A = P(1 + r) t P = principal amount (the initial amount you borrow or deposit) r = annual rate of interest (as a decimal) t = number of years the amount is deposited or borrowed for. A = amount of money accumulated after n years, including interest. n = number of times the interest is compounded per year (semiannually, quarterly, monthly, etc.)

12% interest for 7 years

5% interest for 8 years compounded… 1.Semiannually 2.Quarterly 3.Monthly

FIND THE AMOUNT 11% for 12 years 2.5% for 5 years Quarterly Monthly