Compound Interest

A12 'i4=3

03

2×12=24

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2¥25 (l÷lo)xko%

kilo l% 0,1% .

Compound Interest y Interest that is compounded (paid,

calculated) more than one time y You get interest on interest y It makes money grow quickly y How we got the correct answer to

Fry’s Bank qkE-tE.ge#Esosz

P r t

SooAHAB20 $soo

$520 20$1520

5200.gl20.80

$520 +20.80=511540.80

540.800k£ $540.8021.63 21.63

562.43 $5627.4

$562.43 $6243- 500.00

-$62.43

036512421

12 243 : 8

1 : 46

$10000.04 1 $40 $1040$10400.04 1 $4160 $1081.60

$1081600.04 I $43.2619112486a

I=l¥oooko .o4k .)= $40

:1,26--1/2=0.54 times

4

I $1000 0.05 0 . 5$25 $1025T$fsooSo5$2s63$fSo . 63T.no#ino76.9o

2 WHO 0.0505 $26.92 $1103.82$103.82

When is compound interest good? y When you invest money

When is compound interest bad?

y When you owe money

Example y Charlie invests $3000 at 4% per year,

compounded quarterly for 5 years. y a) What was the amount after 5 years y b) How much interest was earned