Bell Ringer Suppose Shawn deposited $2,500 in a savings account which earns 3.5% interest and is compounded monthly. Find the amount he has after six.

Slides:

Advertisements

Similar presentations

Your Money and and Your Math Chapter Credit Cards and Consumer Credit

Advertisements

What is Compound Interest? Compound interest is interest that is compounded at certain intervals or earned continuously (all the time). Annually: A = P(1.

SECTION 5-8 Annuities pp

Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 1 Chapter 11 Annuities, Stocks, and Bonds Section 1 Annuities and Retirement Accounts.

Chapter 3, Section 6 Annuities. I can… Calculate the future value of an ordinary annuity. Calculate the present value of an ordinary annuity.

Warm-Up: Compound Interest Raquel invests $4000 for 6 years in a bond that earns 7% per year compounded semi-annually. How much interest does the bond.

– The Number e and the Function e x Objectives: You should be able to… 1. Use compound interest formulas to solve real-life problems.

7-7 Simple and Compound Interest. Definitions Left side Principal Interest Interest rate Simple interest Right side When you first deposit money Money.

8 – 5 Properties of Logarithms Day 2

Introduction to Accounting I Professor Marc Smith CHAPTER 1 MODULE 1 Time Value of Money Module 3.

5.1 Deposits Savings Accounts: earn interest on the money in the account for bank’s use of your money. Deposit: Money given to the bank to hold. ◦ Deposit.

Annuities; Loan Repayment  Find the 5-year future value of an ordinary annuity with a contribution of $500 per quarter into an account that pays 8%

Lesson 2 – Annuities Learning Goal I can solve for the future value of an annuity.

Interest Applications - To solve problems involving interest.

Calculate using the formula MCR 3UI Unit 7 – Day 2.

Compound Interest. Compound Interest (except continuous) When the bank pays interest on both the principal and the interest an account has already earned,

Introduction to Accounting I Professor Marc Smith CHAPTER 1 MODULE 1 Time Value of Money Module 4.

1 Project 2- Stock Option Pricing Mathematical Tools -Today we will learn Compound Interest.

Exercise Write 5% as a decimal Write 6.5% as a decimal Exercise.

Week 13 Simple Interest. Lesson Objectives After you have completed this lesson, you will be able to: Represent or solve simple interest problems. Solve.

Calculating interest You can calculate the time value of your savings by figuring out how much interest you will earn. Principal – the original amount.

Simple Interest.

Time Value of Money Annuity.

CHAPTER 8 Personal Finance.

Section 6.7 Financial Models.

Opportunity costs and strategies

Financial Applications -Annuities (Accumulated Amount)

Simple Interest Formula I = PRT.

Math in Our World Section 8.3 D1 Compound Interest.

Compound Interest.

Section 5.7 Financial Models

Section 4.7 Compound Interest.

Chapter 3 Mathematics of Finance

8.3 Compound Interest HW: (1-21 Odds, Odds)

Chapter 3 Mathematics of Finance

Pass up your homework and clear your desk for the QUIZ

Ordinary Annuities, Sinking Funds, and Retirement Investments

Example 4 Annuities Show that if regular payments of $1000 are made at the end of each year for 5 years into an account that pays interest at 10% per year.

Compound Interest.

Compound Interest.

Who is very Interested in Compounding

Lesson 6 Regular Annuities-Future Value

Lesson 2 The amount of an Annuity

Do Now If you did not finish it yesterday, put your worksheet into the basket In the standard form y = a•bx, what does each variable represent? If Ms.

Time Value of Money Math

Compound Interest.

CDs and Annual Yield Lesson 7.3.

Lial/Hungerford/Holcomb/Mullins: Mathematics with Applications 11e Finite Mathematics with Applications 11e Copyright ©2015 Pearson Education, Inc. All.

Present Value Time Value of Money.

3.5 Exponential Growth & Decay

Savings and Interest Lesson 4.4.

SECTION 5-5 Compound Interest pp

Compound Interest.

Annuities, Future Value, and Sinking Funds

3.6 – Mathematics of Finance

Deferred annuity S.Y.Tan.

Financial Applications -Annuities (Present Value)

Savings and Interest Skill 11.

2-7 Future Value of Investments

Section 6.7 Financial Models

4.6 Compound Interest.

Piecework Section 1.4.

HOW TO MAKE MONEY WITHOUT DOING ANY WORK

Annuities, Stocks, and Bonds

CDs and Annual Yield Lesson 25.

Future Value and Compounding

Compound Interest.

Compounded and Continuous Interest

Discounted Cash Flow Valuation

Copyright © 2019 Pearson Education, Inc.

Presentation transcript:

Bell Ringer Suppose Shawn deposited $2,500 in a savings account which earns 3.5% interest and is compounded monthly. Find the amount he has after six years.

Interest Tables & Annuities Skill 12

Compound Interest Tables

To solve compound interest we can use tables. Step 1; Total Interest Periods Periods per year * # of years Step 2; Find Interest rate per periods 𝐴𝑛𝑛𝑢𝑎𝑙 𝑅𝑎𝑡𝑒 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃𝑒𝑟𝑖𝑜𝑑𝑠 Step 3; Find amount of interest using table Compound Interest-Amount of $1 Step 4; Find amount 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙∗𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 $1.00

Suppose Arbor Bank pays 18% interest compounded monthly on regular savings accounts. Hank deposited $3000 for 3 years. How much interest was earned after 3 years.

Suppose Great Western Bank pays 12% interest annually and on regular savings accounts they compound quarterly. Janet deposited $42,500 for 2 years. Find the interest that was earned.

Suppose Wells Fargo Bank pays 18% interest annually and on regular savings accounts they compound monthly. Dave deposited $21,000 for 4 years. Find the amount he has in the account after that time.

Annuities 4.5b

When an equal amount of money is deposited at equal time intervals it is called annuity. Ordinary Annuity is when equal deposits are made at the end of the interest period. Annuity Due is when regular deposits are made at the beginning of the interest period.

Using annuity to find future value… For Ordinary Annuity 𝐹𝑢𝑡𝑢𝑟𝑒 𝑉𝑎𝑙𝑢𝑒=𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 ∗𝑓𝑢𝑡𝑢𝑟𝑒 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 $1 For Annuity Due 𝐹𝑢𝑡𝑢𝑟𝑒 𝑉𝑎𝑙𝑢𝑒=𝐹𝑢𝑡𝑢𝑟𝑒 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑎𝑛𝑛𝑢𝑖𝑡𝑦∗$1 +𝑟𝑎𝑡𝑒 𝑝𝑒𝑟 𝑝𝑒𝑟𝑖𝑜𝑑

Mike deposits $750 in an ordinary annuity at the end of each quarter in an account earning 6% interest compounded quarterly. Find the future value of the account in 2 years.

Steps of annuity due… Find future value of ordinary annuity Find rate per period then add 1 Step 3 Multiply the numbers in step 1 and step 2

Dakota deposits $900 in an annuity due account at the beginning of each quarter in an account earning 6% interest compounded quarterly. Find the future value of the account in 2 years.

Skill 12: Interest Tables & Annuities Questions? Summarize your notes Homework Worksheet