Objectives: Determine the Future Value of a Lump Sum of Money Determine the Present Value of a Lump Sum of Money Determine the Time required to Double.

Slides:

Advertisements

Similar presentations

4/29/2015Section 8.31 Section 8.3 Compound Interest Objectives 1.Use the compound interest formulas. 2.Calculate present value. 3.Understand and compute.

Advertisements

Sullivan PreCalculus Section 4.7 Compound Interest

Simple Interest 7th Grade Math.

Simple and Compound Interest. Simple Interest Interest is like “rent” on a loan. You borrow money (principal). You pay back all that you borrow plus more.

Microeconomics and Macroeconomics FCS 3450 Spring 2015 Unit 3.

CONTINUOUSLY COMPOUNDED INTEREST FORMULA amount at the end Principal (amount at start) annual interest rate (as a decimal) time (in years)

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.

Mathematics of finance

Simple Interest Formula I = PRT.

Compound Interest Essential Skill: Demonstrate Understanding of Concept.

Section 6.7 Compound Interest. Find the amount A that results from investing a principal P of $2000 at an annual rate r of 8% compounded continuously.

Compound growth of savings or investments 1. Interest: definition A. a sum paid or charged for the use of money or for borrowing money B.such a sum expressed.

Section 5.7 Compound Interest. A credit union pays interest of 4% per annum compounded quarterly on a certain savings plan. If $2000 is deposited.

Section 4 Dr.Hoda’s part Interest Sheet 5 Eng. Reda Zein.

Compound Interest Section 5. Objectives Determine the future value of a lump sum of money Calculate effective rates of return Determine the present value.

Simple and Compound Interest

SIMPLE INTEREST Interest is the amount paid for the use of money.

1. Definitions for Savings Account 2. Common Compounding Periods 3. New from Previous Balance 4. Present and Future Value 5. Simple Interest 6. Effective.

Slide 1 Copyright © 2015, 2011, 2008 Pearson Education, Inc. Percent and Problem Solving: Interest Section7.6.

Advanced Precalculus Notes 4.7 Compound Interest

A3 4.1 Exponential functions, Compound Interest, Interest Compounded Continuously, Applications HW: p , 25-55, odd.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit B, Slide 1 Managing Money 4.

Copyright © 2008 Pearson Education, Inc. Slide 4-1 Unit 4B The Power of Compounding.

Section 4A The Power of Compounding Pages

Copyright 2013, 2010, 2007, Pearson, Education, Inc. Section 11.3 Compound Interest.

Section 2: Calculations. I CAN:  Define principle  Apply the rate of return  Calculate Simple interest, compound interest and the rule of 72.

Interest. How simple and compound interest are calculated Simple interest calculation I = PRT (Interest = Principal x Rate x Time) Dollar Amount x Interest.

Compound Interest SWBAT compute compound interest using a table.

Thinking Mathematically

Warm Up 2/5 or 2/6 Simplify:. Answers Compound Interest Compounding interest is where money earned is added to the principal and then recalculated to.

Copyright 2013, 2010, 2007, Pearson, Education, Inc. Section 11.3 Compound Interest.

6.2B – Compound Interest Formula Objective: TSW calculate how much an investment increases using the compound interest formula.

1. Suppose models the number of m&m’s in a jar after time t. How long will it take for the number of m&m’s to fall below 35? a) Determine t algebraically.

Chapter D and E – compound interest and depreciation

© 2010 Pearson Prentice Hall. All rights reserved. CHAPTER 8 Consumer Mathematics and Financial Management.

Exponential Graphs Equations where the variable (x) is the POWER y = ab x – h + k h moves the graph horizontally k moves the graph vertically.

4.2 Compound Interest Day 2. Compound Interest A = P(1 + ) nt A = amount of $ accumulated P = initial amount of $ invested (principle) r = rate of interest.

SAVINGS. SAVING THE KEY TO WEALTH Grab a computer, log onto Wells Fargo -click on banking -click on savings accounts/CDs -Enter zip code (07006) if required.

Section 4A The Power of Compounding Pages

7-7 Simple and Compound Interest. Definitions Left side Principal Interest Interest rate Simple interest Right side When you first deposit money Money.

Section 5.7 Compound Interest.

Copyright © 2011 Pearson Education, Inc. Managing Your Money.

Simple Interest Formula I = PRT. I = interest earned (amount of money the bank pays you) P = Principle amount invested or borrowed. R = Interest Rate.

Math – Solving Problems Involving Interest 1.

Compound Interest. A = New balance after interest P = Principle amount invested or borrowed. R = Interest Rate usually given as a percent (must changed.

Simple Interest Formula I = PRT. I = PRT I = interest earned (amount of money the bank pays you) P = Principle amount invested or borrowed. R = Interest.

Simple Interest Formula I = PRT.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall. Section 5.7 Financial Models.

Find the amount after 7 years if $100 is invested at an interest rate of 13% per year if it is a. compounded annually b. compounded quarterly.

Compound Interest Money, where fashion begins…. Vocabularies and Symbols A = Accumulated Amount (ending balance, in $) A = Accumulated Amount (ending.

Section 6.7 Financial Models. OBJECTIVE 1 A credit union pays interest of 4% per annum compounded quarterly on a certain savings plan. If $2000 is.

Compound Interest Formula. Compound interest arises when interest is added to the principal, so that, from that moment on, the interest that has been.

Section 4.7: Compound Interest. Continuous Compounding Formula P = Principal invested (original amount) A = Amount after t years t = # of years r = Interest.

Section 5.7 Financial Models. A credit union pays interest of 4% per annum compounded quarterly on a certain savings plan. If $2000 is deposited.

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.

What is Interest? Discuss with a partner for 2 minutes!

Compound Interest. Which amount would you rather have in 10 year’s time? Option A- Put £1000 in a box under the bed, and at the end of each year put £100.

Unit 8, Lesson 2 Exponential Functions: Compound Interest.

Simple and Compound Interest Unit 4 - Investing. Determining Simple Interest I = p * r * t Interest = Principle X Rate X Time ( in years)

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.

Section 11.3 – The Number e. Compound Interest (Periodically) A – Accumulated Money P – Principal (Initial Amount) r – Interest Rate (in decimal form)

Compound Interest. A = New balance after interest P = Principle amount invested or borrowed. R = Interest Rate usually given as a percent (must changed.

Interest Applications - To solve problems involving interest.

CHAPTER 8 Personal Finance.

Section 4.7 Compound Interest.

8.3 Compound Interest HW: (1-21 Odds, Odds)

Formulas for Compound Interest

CHAPTER 8 Personal Finance.

§8.3, Compound Interest.

Presentation transcript:

Objectives: Determine the Future Value of a Lump Sum of Money Determine the Present Value of a Lump Sum of Money Determine the Time required to Double or Triple a Lump Sum of Money

 Compound Interest: interest computed on your original investment as well as on any accumulated interest  Principle: a sum of money is invested at an annual percentage rate, in decimal form, compounded once per year  Amount of the balance: the accumulated value is determined when the interest is added to the principle at year’s end  n compounding periods per year: most savings institutions have plans in which interest is paid more than once a year or times a year  Time: time periods in years  Compounded continuously:

 1.$100 invested at 4% compounded quarterly after a period of 2 years  2.$100 invested at 10% compounded continuously after a period of years

 3.You decide to invest $8000 for 6 years and you have a choice between two accounts. The first pays 7% per year, compounded monthly. The second pays 6.85% per year, compounded continuously. Which is the better investment?

 4.To get $100 after 2 years at 6% compounded monthly  5.What rate of interest compounded annually is required to double an investment in 3 years?

 6.How long does it take for an investment to double in value if it is invested at 8% per annum compounded monthly? Compounded continuously?

 EX: Find the effective rate of interest for compounded quarterly