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Simple and Compound Interest - GenMath

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MICHELLE CASTRO
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18 views

Simple and Compound Interest - GenMath

Uploaded by

MICHELLE CASTRO
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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About the video watched…

1. What can you say about the video?

2. What are the things that you’ve learned


from the video?

3. Why is it important to save money?


ACTIVITY

In groups, you will create a poster that


highlights the benefi ts of saving money and
the impact of interest in their savings. You
should include examples of how interest can
help you achieve your fi nancial goals.
About the activity…

1. How was the activity?

2. What are the new things that you’ve


learned from the activity?
OBJECTIVES

1. Familiarize with compound interest, maturity


value, future value and present value.

2. Calculate the compound interest, maturity value,


future value, and present value.

3. Solve problems involving compound interest; and

4. Realize the importance of saving money.


Compound
Interest
General Mathematics
Lender or Creditor

- person (or institution) who invests


the money or makes the funds available.
Borrower or Debtor

- person (or institution) who owes the


money or avails of the fund from the lender.
Origin or Loan Date

- date on which money is received by


the borrower.
Repayment Date or Maturity Date

- date on which the money borrowed or


loan is to be completely repaid.
Time or Term (t)

- amount of time in years the money is


borrowed or invested; length of time
between the origin and maturity dates.
Principal (P)

- amount of money borrowed or


invested on the origin date.
Rate (r)

- annual rate, usually in percent,


charged by the lender, or rate of increase of
the investment.
Interest (I)

- amount paid or earned for the use of


money.
Maturity Value or Future Value (F)

- amount after t years that the lender


receives from the borrower on the maturity
date.
Maturity Value or Future Value (F)

- amount after t years that the lender


receives from the borrower on the maturity
date.
Compound Interest

- is the interest computed on the


principal and also on the accumulated past
interest, so compound interest is a way to
earn money because you don’t just earn
using your original money, but also the
interest you earned.
Compound Interest Formula
Compound Interest Formula

Where

= future value or accumulated value

= principal

= compound interest

= rate of interest per interest period


Compound Interest Formula

Where

= number of interest periods

= number of compounding periods per year

= time or term of investment (in years)

= nominal rate of interest (in percent)


Example 1

An amount of Php100,000 is invested for 2


years at 6% interest compounded quarterly.
Is this a better investment compared to
investing it at a simple interest of 6%?
Example 2

Kyle must decide if he should deposit his


Php5,000 in a savings account at a simple
interest of 5% for 5 years or invest it in his
friend’s business which can potentially earn
an interest of 5% compounded monthly for
5 years. What should be his decision?
GROUP ACTIVITY

Group 1: Due to COVID-19 pandemic Miss Karen a female


resident of Municipality of Bay somewhere in Laguna thinks
of a business that can provide for her needs as well as the
need of her neighbors so she can be of help even in this
trying time. Since she doesn’t have money on hand, she
decided to borrow from a bank as the start-up capital of
₱50,000.00 at 7% interest rate compounded annually
within 5 years. Compute for the interest yield.
GROUP ACTIVITY

Group 2: Your father asked you about


investment and wanted to know the interest
that will be earned if he will invest Php
500,000 in a certain bank that off ers an
annual compounding interest of 8% for 5
years.
Example 2
EVALUATION

1. A person (or institution) who invests


the money or makes the funds available.
a.Lender or Creditor
b.Origin or Loan Date
c.Time or Term (t)
d.Borrower or Debtor
EVALUATION

2. A person (or institution) who owes the


money or avails of the fund from the
lender.
a.Lender or Creditor
b.Origin or Loan Date
c.Time or Term (t)
d.Borrower or Debtor
EVALUATION

3. The amount of time in years the money


is borrowed or invested, length of time
between the origin and maturity dates.
a.Lender or Creditor
b.Origin or Loan Date
c.Time or Term (t)
d.Borrower or Debtor
EVALUATION

4. The date on which money is


received by the borrower.
a.Lender or Creditor
b.Origin or Loan Date
c.Time or Term (t)
d.Borrower or Debtor
EVALUATION

5. It is the interest computed on the principal and also on the


accumulated past interest, so compound interest is a way to
earn money because you don’t just earn using your original
money, but also the interest you earned.
a.Compound Interest
b.Simple Interest
c.Time Interest
d.Maturity Value Interest

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