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.

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Presentation transcript:

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 at 7⅞% for 5 years. TALKING = 0%

Compound Interest Compounded Interest earnings are calculated on the original amount plus accumulated interest. The principal increases each year based on the interest earned.

Compound Interest

Compound interest can be compounded annually (once a year), semi-annually (2 times a year), quarterly (3 times a year), monthly (12 times a year), weekly (52 times a year), and daily (365 times a year).

Compound Interest By increasing the amount of times the interest is compounded, the interest that is earned also increases.

Compound Interest Find the amount that results from $500 invested at 8% compounded quarterly after a period of 2 years