3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Learning Goal

­ answer problems with Simple Interest and Compound Interest

Simple and Compound Interest

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Year Interest Amount

0 1000.00

1 100.00 1100.00

2 100.00 1200.00

3 100.00 1300.00

4 100.00 1400.00

5 100.00 1500.00

Year Interest Amount

0 1000.00

1 100.00 1100.00

2 110.00 1210.00

3 121.00 1331.00

4 133.10 1464.10

5 146.41 1610.51

Simple Interest Compound Interest 

Invest your money... 

You have $1000 to invest

The bank gives you 10% interest

How much money will you have after 5 years

Do this without using any formulas

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Year Interest Amount

0 1000.00

1 100.00 1100.00

2 100.00 1200.00

3 100.00 1300.00

4 100.00 1400.00

5 100.00 1500.00

Year Interest Amount

0 1000.00

1 100.00 1100.00

2 110.00 1210.00

3 121.00 1331.00

4 133.10 1464.10

5 146.41 1610.51

Simple Interest Compound Interest 

What is the difference between the two?

Simple - interest is only calculated on the original amount deposited (principle)

Compounded - interest is earned on the original amount (principle) and the interest already earned

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Exponential Growth of Money

Compound Interest FormulaFuture Value - total amount after a certain period

A = P ( 1 + i ) n

amount in the future

principal

interest rate/compounding period

number of compounding periods

principle

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Compounding Period

­ annually­ semi­annually­ monthly­ bi­weekly­ weekly­ daily

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

But how often do banks pay interest ?   

How much will you have after 2 years if you deposit 

$1000 the bank at 12% per year paid annualy.

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

How much will you have after 2 years if you deposit 

$1000 the bank at 12% per year paid monthly.

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Some Practise for you ....

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Some Practise for you ....

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Investigate Interest Rates

Borrowing ­ Line of Credit

­ Credit Card

­ Mortgage

­ Student Loan

Saving ­ Chequing

­ Savings

­ GIC

­ Canada Savings Bond

Other Options:  ­ Stocks

­ Mutual Funds

­ Annuities

­ RRSP

­ RIF

3U ­ 8 ­ day 6 ­ Simple and Compound Interest ­ SNOW DAY.notebook

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January 11, 2018

Homework

Pg. 481 # 5acePg. 490 # 1, 3, 5, 14, 15Pg. 499 # 3ab, 8