November 30, 2015
(3.6) Finance Math
Objective: To solve simple and compound interest problems.
Why: To understand how money can work for you.
https://www.youtube.com/watch?v=f9zraS8EKw4
November 30, 2015
Obj: To solve simple and compound interest problems.
Interest Compounded k Times per Year
r
A=P 1+
k
kt
Interest Compounded Annually
A = P(1 + r)n
Interest Compounded Continuously
A = Pert
November 30, 2015
Obj: To solve simple and compound interest problems.
1. Mary has $600 to invest at 8% annual interest
compounded monthly. How long will it take for her
investment to grow to $2400?
November 30, 2015
Obj: To solve simple and compound interest problems.
2. Sam invests $200 at 7% annual interest
compounded continuously. Find the value of his
investment at the end of each of the years 1, 2, ... , 7.
November 30, 2015
Obj: To solve simple and compound interest problems.
3. If you have a bank account whose principal = $1000, and your bank compounds
the interest twice a year at an interest rate of 5%, how much money do you
have in your account at the year's end?
November 30, 2015
Obj: To solve simple and compound interest problems.
4. The first credit card you got charges 12.49% interest to its customers and
compounds that interest monthly. Within one day of getting your first credit
card, you max out the credit limit by spending $1,200.00. If you do not buy
anything else on the card and you do not make any payments, how much money
would you owe the company after 6 months?
November 30, 2015
Obj: To solve simple and compound interest problems.
5.
How much would need to be deposited into an account earning 4.7%, compounded
quarterly, so that the balance will be $1,000,000 in 20 years?
November 30, 2015
6.
Exit Problem
Obj: To solve simple and compound interest problems.
You win the lottery and get $1,000,000. You decide that you want to invest all of
the money in a savings account. However, your bank has two different plans. If
5 years from now, which plan will provide you with more money?
Plan 1
The bank gives you a 6% interest rate and compounds the interest each month.
Plan 2
The bank gives you a 12% interest rate and compounds the interest every 2 months.
November 30, 2015
Obj: To solve simple and compound interest problems.
HW:
HR: (3.6) Pg.310: 1, 5, 9, 21, 23, 25, 29, 43