Download presentation

Presentation is loading. Please wait.

Published byKenneth Hood Modified over 8 years ago

1
Section 2: Calculations

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

3
Principle This is the amount of money YOU put in. If I put $100 into a savings account at 1% interest, $100 is my PRINCIPLE 1% is my APY or rate of return Always make APY a decimal. EX.01 Instructor: See flipchart

4
Simple Interest This is the easiest type of interest to calculate Multiply Principle X Interest Rate X years invested $100 X.01 X 2 years= $2 Instructor: See flipchart; When complete use 5.3 Simple interest worksheet

5
Compound Interest Compound means you will earn interest on your previously earned interest. So, if you have $100 in a savings account earning 1% for 2 years and it compounds annually, you will: Year 1: 100 X.o1= $1 100 + 1= 101 Year 2: 101 X.01= 1.01 101 + 1.01= 102.01 After 2 years, you have earned $2.01 (simple interest would have earned only $2) Usually interest is compounded quarterly (4X per year), semi-annually (2X per year), or annually (1 X per year) Instructor: See flipchart; When complete use 5.4 compound interest

6
The Rule of 72 72/%rate of return= how many years until your money doubles. DO NOT CHANGE % TO DECIMAL If I invest $100 at 1%, I will have $200 in 72 years 72/1=72 Instructor: See flipchart; When complete use 5.5 rule of 72

7
CAN I? Define principle Apply the rate of return Calculate Simple interest, compound interest and the rule of 72 I can prove this by completing: 5.3: simple interest 5.4: compound interest 5.5: Rule of 72

Similar presentations

© 2024 SlidePlayer.com Inc.

All rights reserved.

To make this website work, we log user data and share it with processors. To use this website, you must agree to our Privacy Policy, including cookie policy.

Ads by Google