Interest Rates. Lesson objectives: 1.How to calculate the amount owed on different interest rates. 2.Revise compound interest.

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Presentation transcript:

Interest Rates

Lesson objectives: 1.How to calculate the amount owed on different interest rates. 2.Revise compound interest.

8.9% APR typical for Personal loans between £7,000 and £25,000 where the Personal loan purpose is for a car or home improvements. If you were to receive a loan of £10,000 from HSBC, to buy a car. How much would you have to pay back over 5 years? This is an example of COMPOUND INTEREST!! Where interest is added every year!! Interest for 1st year: £10,000 x = £890 Notice how the 8.9% is changed for it’s equivalent decimal of 0.089!! Amount owed at end of first year: £10,890 Interest for 2nd year: £10,890 x = £ Amount owed at end of 2nd year: £ Interest for 3rd year: £ x = £ Amount owed at end of 3rd year: £12, Interest for 4th year: £12, x = £ Amount owed at end of 4th year: £14, Interest for 5th year: £14, x = £ Amount owed at end of 5th year: £15, Is there an easier way than doing all this work?

Our Barclayloan Plus offers a rate of 7.9% APR * typical for loans of £7500 or more. If you’re an existing customer you can apply online, get a decision straight away and, if you are approved, have the money in your account in 3 hours. If you were to receive a loan of £7500 from Barclays, how much would you have to repay over 4 years? Instead of working out for every year how much you would have to pay, use this formula: Owed = Borrowed x (1 + interest rate) number of years Amount owed = £7500 x = £

Borrow from £1,000 to £25,000 with our fixed-rate personal loan. And get a low rate of 7.4% APR typical for loans of £15,000 or more. If you were to borrow £14,500 from Natwest, how much would you have repaid after 8 years? £

£4500 at 6.8% APR for 3 years. £7000 at 7.7% APR for 5 years. £5750 at 7.9% APR for 3 years. £12000 at 7.8% APR for 7 years. £9000 at 6.9% APR for 6 years £15000 at 7.9% APR for 10 years.