Business Math

Calculating Interest Rates

Standards BCS-LEB-14: The student identifies the elements needed to develop a financial plan and to obtain business financing.

Agenda Bell Ringer: Scholarship Screenleap College Credit Now Recap Essential Questions Assessment

Essential Questions How do businesses use math everyday? How can technology be use to mathematically predict success or failure?

Scholarships Shell Oil Company Technical Scholarship Program $2,500-$5,000 Engineering/Math http://www.shell.us/aboutshell/careers-tpkg/students-and-graduates/scholarships.html

Interest Earned Interest: amount of money that can be earned on money that is invested or borrowed

Why is Interest Important? Money Invested Money Paid on Borrowing Two types of Interest Simple Compound

Simple vs. Compound Interest Simple: End of Year One time per year Avg. Principal Balance Compound: paid on principal + earned interest Daily, Monthly, Quarterly, Semi-or Annually More the better

Simple Interest Paid at the End of Each Year One time per year PRINCIPAL ONLY Investment X Rate = Interest Earned $100 X 5% = $5

Compound Interest Paid on Interest and Principal Annually Semi-Annually Quarterly Monthly

Side Note: Compound Interest is the secret to wealth creation Click Compound Interest Calculator Link

Calculating Simple Interest Principal $100, Interest Rate 3% $100 x 0.10 = $10 End of the year = $110 Year 2: $120 Year 3: $130 Year 4: $140

Calculating Compound Interest (monthly) Principal $100, Interest Rate 10% Monthly Interest = 10%/12 = 0.833% Month 1: 100.8333 Month 2: 101.6736 Month 3: 102.5309 Month 4: 103.3752 Month 5: 104.2367 Month 6: 105.1053 Month 7: 105.9812 Month 8: 106.8644 Month 9: 107.7549 Month 10: 108.6659 Month 11: 109.5583 Month 12: 110.4713 Is this a big deal $110 vs. $110.4713?

What happens over time? Simple Compound 5 Years 10 Years 15 Years 25 Years 30 Years 40 Years 50 Years 60 Years $150.00 $164.53 $200.00 $270.40 $250 .00 $445.39 $350.00 $1,205.70 $400.00 $1,983.74 $500.00 $5,370.07 $600.00 $14,536.99 $700.00 $39,353.24

Assessment Use Microsoft Excel to create a simple interest vs. compound interest calculator. Follow screencast directions?

How To