Big Idea Compound Interest is the way most banks and other savings institutions pay savers who put their money into their accounts. Repeated Multiplication.

Slides:

Advertisements

Similar presentations

6.7 Compound Interest.

Advertisements

Sullivan PreCalculus Section 4.7 Compound Interest

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.

Compound Interest Essential Skill: Demonstrate Understanding of Concept.

16.2 Saving and Investing How can you save money by investing small amounts of money regularly?

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.

7-8 simple and compound interest

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

8.2 Day 2 Compound Interest if compounding occurs in different intervals. A = P ( 1 + r/n) nt Examples of Intervals: Annually, Bi-Annually, Quarterly,

Section 1.1, Slide 1 Copyright © 2014, 2010, 2007 Pearson Education, Inc. Section 8.2, Slide 1 Consumer Mathematics The Mathematics of Everyday Life 8.

 What large purchases or expenditures do you foresee in your future?  How are you preparing to make these purchases a reality?

Interest MATH 102 Contemporary Math S. Rook. Overview Section 9.2 in the textbook: – Simple interest – Compound interest.

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

Notes Over 7 – 8 1. Suppose you deposit $1000 in a savings account that earns 6% per year. Find the interest earned in two years. Simple Interest Formula.

Simple and Compound Interest

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

Pg. 255/268 Homework Pg. 277#32 – 40 all Pg. 292#1 – 8, 13 – 19 odd #6 left 2, up 4#14Graph #24 x = #28x = 6 #35 Graph#51r = 6.35, h = 9, V = 380 #1 Graph#3a)

Section 4A The Power of Compounding Pages

Compound Interest SWBAT compute compound interest using a table.

Thinking Mathematically

SECTION 5-6 Compound Interest Tables pp

Applications of Exponential Functions. Objectives To solve real-life application problems using the properties of exponents and exponential functions.

Types of Compound Interest Compound Annually= Once per year Compound Semi-annually= 2 times per year Compound Quarterly= 4 times per year Compound Monthly=

Economics.  Interest can mean two things to the consumer…  If you put money in a bank, you will get paid interest on your deposit over time.  If you.

Business Math 3.6 Savings Account.

Notes Over 7 – 7 Solve for the indicated variable.

Section 4A The Power of Compounding Pages

– The Number e and the Function e x Objectives: You should be able to… 1. Use compound interest formulas to solve real-life problems.

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

Compound Interest Tables pp SECTION.

3.1 (part 2) Compound Interest & e Functions I.. Compound Interest: A = P ( 1 + r / n ) nt A = Account balance after time has passed. P = Principal: $

Compounding Interest Formula It’s like Math, but not really.

Section 5.7 Compound Interest.

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

PRE-ALGEBRA. Lesson 7-7 Warm-Up PRE-ALGEBRA Simple and Compound Interest (7-7) principal: the amount of money that is invested (put in to earn more)

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

Warm-ups You deposit $1000 in a savings account that yields 6% simple interest. After two years what is you account balance The balance for years 0, 1.

3 BANKING SERVICES 3-4 Explore Compound Interest

Pre-Algebra Simple and Compound Interest Suppose you deposit $1,000 in a savings account that earns 6% in interest per year. Lesson 7-8 a. Find the interest.

Section 4.7: Compound Interest

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.

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.

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide COMPOUND INTEREST FORMULA Become familiar with the derivation of the compound.

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.

Compound Interest. interest that actually earns interest itself to figure: –find the initial interest –add it to the principal –find the interest on the.

Exponential Growth and Decay. Exponential Growth When you have exponential growth, the numbers are getting large very quickly. The “b” in your exponential.

3.10 & 3.11 Exponential Growth Obj: apply compound and continuously compounding interest formulas.

1.Simplify: 2. Simplify: 3.Simplify: 4.Simplify: 5. Solve for x: Warmup

6.6 Compound Interest. If a principal of P dollars is borrowed for a period of t years at a per annum interest rate r, expressed in decimals, the interest.

Unit 8, Lesson 2 Exponential Functions: Compound Interest.

TVM Review. What would your future value be if you invested $8,000 at 3% interest compounded quarterly for 15 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 8.3 Compound Interest Math in Our World. Learning Objectives  Compute compound interest.  Compute the effective interest rate of an investment.

LEQ: How do you calculate compound interest?.  Suppose you deposit $2,000 in a bank that pays interest at an annual rate of 4%. If no money is added.

Do Now #5 You decide to start a savings. You start with 100 dollars and every month you add 50% of what was previously there. How much will you have in.

Compound Interest I.. Compound Interest: A = P ( 1 + r / n ) nt A = Account balance after time has passed. P = Principal: $ you put in the bank. r = interest.

Interest Applications - To solve problems involving interest.

Week 13 Simple Interest. Lesson Objectives After you have completed this lesson, you will be able to: Represent or solve simple interest problems. Solve.

Section 6.7 Financial Models.

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

Annual Percentage Yield APY

Presentation transcript:

Big Idea Compound Interest is the way most banks and other savings institutions pay savers who put their money into their accounts. Repeated Multiplication Property of Powers When n is a positive integer, x = x  x  …  x. n factors { n

Warm-Up In the following table, P1, P2, and P3 stand for the three population estimates on page 397 and x stands for the number of years from now. Complete the table. Then discuss the results and describe trends in the data. x

Compound Interest Formula If a principal P earns an annual yield of r, then after t years there will be a total amount A, where A = P( 1 + r ) t

Additional Examples 1. Suppose you deposit P dollars in a savings account upon which the bank pays an annual yield of 3.5%. If the account is left alone, how much money will be in it at the end of a year? 2. Suppose you deposit $200 in a savings account upon which the bank pays an annual yield of 3.5%. a. If the account is left alone, how much money will be in it at the end of three years? b. How much interest did you earn in the three years?

Additional Example 3. When the twins were born, their parents put $3,000 into an account for college. What will be the total amount of money in the account after 19 years at an annual yield of 5.9%?

Most financial institutions compound interest on investments more than once a year. The formula for compound interest given in this lesson can be modified to take this into account. Explain to the students that if a financial institution compounds interest more often, the formula would be A = P ( 1 + r ) where n is the number of times interest n is compounded each year. nt What value of n would be used if it says annually, semi-annually, quarterly, and monthly? 1, 2, 4, 12 respectively.