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1. The document discusses calculating simple and compound interest on various principal amounts with different interest rates and time periods. 2. Formulas provided include the simple interest formula I=prt and the compound interest formula B=p(1+r)n. 3. Examples are given of calculating simple interest earned over 6 years on $400 at 5% interest, and compound interest balances after 4 years on an initial $400 deposit at 5% interest compounded annually.
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- 1. Objective: calculate simple and compound interest Find each amount. 1. 6% of $400 2. 4.5% of $700 3. 5.5% of $325 Bellwork Solve for p. 4. I = prt 5. 3p + 4 = k
- 2. principal - money first deposited interest - money you earn on principal interest rate - simple interest - only paid on principal Simple Interest Formula I = prt
- 3. Suppose you deposit $400 in a savings account. The interest rate is 5% per year. Find the simple interest earned in six years. Find the total of principal plus interest. Find the interest earned in three months. Find the total principal plus interest.
- 4. Compound interest - when a bank pays interest on the principal and on the interest an account has earned. You deposit $400 in an account that earns 5% interest compounded annually. What is the balance in your account after 4 years? In your last calculation, round to the nearest cent. Principal at Beginning of Year Interest Balance Year 1 Year 2 Year 3 Year 4
- 5. Compound-Interest Formula B = p(1 + r) n final balance principal interest rate number of interest periods Find the balance on a deposit of $1,000 that earns 6% interest compounded semiannually for 5 years.
- 6. Find the balance for each account. Amount deposited: $900, annual interest: 2%, time: 3 years a) compounded annually b) compounded semiannually
- 7. HW pg. 385 # 1-15 odd