(3.6) finance math objective: to solve simple and …...november 30, 2015 obj: to solve simple and...
TRANSCRIPT
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 Annually
A = P(1 + r)n
Interest Compounded k Times per Year
A = P 1 + rk
kt
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.
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?
5.
November 30, 2015
Obj: To solve simple and compound interest problems.
Plan 1The bank gives you a 6% interest rate and compounds the interest each month.
Plan 2The bank gives you a 12% interest rate and compounds the interest every 2 months.
6.
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?
Exit Problem
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
November 30, 2015
Plan 1The bank gives you a 6% interest rate and compounds the interest each month.
Plan 2The bank gives you a 12% interest rate and compounds the interest every 2 months.
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. In 5 years from now, which plan will provide you with more money? Show all work!
Precalculus Name: __________________
November 30, 2015
Obj: To solve simple and compound interest problems.
Annual Percentage Yield (APY) the percentage rate that, compounded annually, would yield the same return as the given interest rate with the given compounded period.
Tom invests $2000 with Key Bank at 5.15% annual interest compounded quarterly. What is the equivalent APY?
November 30, 2015
Obj: To solve simple and compound interest problems.
annuity: sequence of equal periodic payments
ordinary: deposits are made at the end of each period at the same time the interest is posted in the account
FV = R(1 + i)n - 1 i
Future Value of an annuity, consisting of n equal periodic payments of R dollars at an interest rate of i per compounding period (payment interval) is:
November 30, 2015
Obj: To solve simple and compound interest problems.
3. At the end of each quarter, Emily makes a $400 payment into the Smithville Financial Fund. If her investments earn 7.75% annual interest compounded quarterly, what will be the value of Emily's annuity in 25 yrs?
November 30, 2015
Obj: To solve simple and compound interest problems.
Present Value of an Annuity consisting of n equal payments of R dollars earning an interest rate i per period (payment interval) is:
PV = R1 - (1+i)-n
i
Cindy purchases a new car for $19,000. What are the monthly payments for a 3-year loan with a $3000 down payment if the annual interest rate (APR) is 3.1%
November 30, 2015
Obj: To solve simple and compound interest problems.
HW:
(HR): (3.6)Pg.310: 13, 17, 19, 49, 53
November 30, 2015
Obj: To solve simple and compound interest problems.
November 30, 2015
Obj: To solve simple and compound interest problems.