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COMPOUND INTEREST GROUP 2.pptx - 20241107 - 075328 - 0000

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25 views

COMPOUND INTEREST GROUP 2.pptx - 20241107 - 075328 - 0000

Uploaded by

Angell Geroche
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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Prepared by Group 2

Compound
General Mathematics

Interest
7 November, 2024
OBJECTIVE:

SOLVE PROBLEMS INVOLVING


COMPOUND INTEREST
What is
Compound
Interest?
Compound Interest is the interest imposed on a loan
or deposit amount. It is the most commonly used
concept in our daily existence. The compound
interest for an amount depends on both Principal
and interest gained over periods. This is the main
diff erence between compound and simple interest.
Compound Interest
Formula
The compound interest is the interest-
based on the initial principal amount and
the interest collected over the period of
time. The compound interest formula is
given below:

Compound Interest = Amount –


Principal
Compound Interest
Formula
Here, the formula is given by:

Where:

A = Final amount
P = Principal, or Original
Amount
r = Interest rate
n = Number of periods per
year
t = Time per year
Maria puts ₱20,000 in a savings account paying 8%
Example 1 annual Interest compounded monthly. At this rate how
much money will be in the account after 10 years?

• Identify and plug in the • Solve for the unknown • Solve for the interest
known values 1) Multiply for the exponent first
value. using the formula
P (Principal Amount) = ₱20,000 A = 20,000(1 + I=A -P
r (Interest Rate) = 8% or 0.08 2) Turn r/n into a decimal
0.08/12)¹²⁰ I = 44,394.56 -
(To get a percentage in decimals, A = 20,000(1 + 20,000
simply divide it by 100) 3) Add 1 + decimal amount
0.006667)¹²⁰ I = ₱24,394.56
t (Time per year) = 10 years A = 20,000(1.006667)¹²⁰
n (Number of periods per 4) Multiply the exponent
year) = 12 A = 20,000(2.219728434)
A (Amount) = ? 5) Multiply for the answer Remember the
A = 20,000(1 +
A = ₱44,394.56 formula:
0.08/12)¹⁰*¹²
James wants to have ₱2,000,000 for retirement in 45 years.
Examp He invests in a mutual fund paying on average of 9.5% each
year compounded quarterly. How much should he deposit

le 2and plug in the


• Identify
into his mutual funds?
• Solve for the unknown • Solve for the interest
known values 1) Multiply for the exponent first
value. using the formula
P (Principal Amount) = ? 2,000,000 = P(1 + I=A -P
r (Interest Rate) = 9.5% or 2) Turn r/n into a decimal
0.095/4)¹⁸⁰ I = 2,000,000 -
0.095 (To get a percentage in 2,000,000 = P(1 + 29,249.9641
decimals, simply divide it by 100) 3) Add 1 + decimal amount
0.02375)¹⁸⁰ I=
t (Time per year) = 45 years 2,000,000 =
n (Number of periods per 4) Multiply the exponent ₱1,970,750.036
P(1.02375)¹⁸⁰
year) = 4 2,000,000 =
A (Amount) ==₱2,000,000 5) Divide both sides for the
P(68.37615231)
Remember the
2,000,000 P(1 +
0.095/4)⁴*⁴⁵
answer
2,000,000 = formula:
P(68.37615231)
68.37615 68.37615
231 231
P=
₱29,249.9641
Sarah wishes to turn her ₱10,000 investment into ₱100,000
Examp in 20 years. How much interest does she need to receive
compounded annually to reach her goal?

le 3and plug in the


• Identify • Solve for the unknown • Solve for the interest
known values 1) Multiply for the exponent first
value. using the formula
P (Principal Amount) = ₱10,000 100,000 = 10,000(1 + I=A -P
r (Interest Rate) = ? 2) Divide both sides by 10,000
r/1)²⁰ I = 100,000 -
t (Time per year) = 20 years 100,000 = 10,000(1 + 10,000
n (Number of periods per r/1)²⁰
10,00 10,00 I = ₱90,000
year) = 1
0 (1 + r/1)²⁰ 0
A (Amount) = ₱100,000
100,000 = 10,000(1 + 3) Raise = 10sides of the equation to
both
r/1)¹*²⁰ 1/20
1/2 1/2 Remember the
((1 + r/1)²⁰) 0
0
1=+10 r = formula:
4) Transpose 1 to other side of
1.122018454
equation r =
1.122018454 -
5) Move 2 decimals 1
to the right for interest rate (in
%) r = 12.2018454% r = or
QUI
Is the interest imposed on a
loan or deposit amount.

A. Simple Interest
B. Business Loans and Comsumer Loans
C. Compound Interest
D. Annuities
COMPOUND
INTEREST
FORMULA
TRUE OR FALSE

The compound Interest for an


amount depends on both principal
and interest gained over periods.
TRUE OR FALSE

Is the interest charge on borrowing


that’s calculated using an original
principal amount only and an interest
rate that never changes.
Jade puts 10,000 in a
savings account paying
6% annual interest
compounded monthly. At
this rate how much
money will be in the
Thank
you for
listenin

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