1. Exponential Functions – Personal Finance Basic Formula for Compound Interest: A = P(1 + r/n) nt » A = Final Amount » P = Beginning Amount » r = rate – expressed as a decimal » n = number of compound periods in one year » t = time in years

2. Credit Cards - Purchases Most credit card rates are in the range of 18-26% Credit card bills come monthly Only a minimum payment is required – You can choose to pay: The minimum payment The full balance every month. Some amount in between. – Interest Due to the Credit Card Company is calculated on the unpaid portion of the bill

3. Credit Cards - Purchases Credit Card First Example: – You purchase a $1000 TV. Option 1 – Only paying the minimum balance Option 2- paying $100 per month Option 3 – paying the full amount when you get the bill

4. Credit Card Purchases – Day 2 You get a bill today for $3000 for your credit card this month. Figure out: – How many months would it take to pay off this bill if you pay $200 each month (Assume your credit card is 21% interest). – How much extra does this cost you?