3-7 FUTURE VALUE OF INVESTMENTS

Slides:

Advertisements

Similar presentations

Copyright © Cengage Learning. All rights reserved.

Advertisements

4/29/2015Section 8.31 Section 8.3 Compound Interest Objectives 1.Use the compound interest formulas. 2.Calculate present value. 3.Understand and compute.

Savings Goals and Institutions. Saving options, features and plans.

Simple Interest 7th Grade Math.

What is Interest? Interest is the amount earned on an investment or an account. Annually: A = P(1 + r) t P = principal amount (the initial amount you borrow.

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide SAVINGS ACCOUNTS Learn the basic vocabulary of savings accounts. Compute simple.

Financial Algebra © Cengage Learning/South-Western Slide 1 10/1/201410/1/2014 WARM-UP What large purchases do you see in your future? How does one determine.

3 BANKING SERVICES 3-1 Checking Accounts

3-8 PRESENT VALUE OF INVESTMENTS

Financial Algebra © Cengage Learning/South-Western 9/30/20149/30/2014 Warm-Up Sam deposits $4,000 into a CD that is continuously compounded. The CD pays.

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide COMPOUND INTEREST FORMULA Become familiar with the derivation of the compound.

Financial Algebra © Cengage/South-Western Slide HISTORICAL AND EXPONENTIAL DEPRECIATION Write, interpret, and graph an exponential depreciation equation.

7-8 simple and compound interest

4-3 LOAN CALCULATIONS AND REGRESSION

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide EXPLORE COMPOUND INTEREST Understand the concept of getting interest on your.

Financial Algebra © Cengage/South-Western Slide RETIREMENT INCOME FROM SAVINGS Calculate future values of retirement investments that are both single.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit B, Slide 1 Managing Money 4.

Financial Algebra © Cengage Learning/South-Western Warm-UpWarm-Up Grab a paper from the back Susan wants to invest her $1,500 into a savings account that.

OBJECTIVES 3-3 SAVINGS ACCOUNTS

Simple & Compound Interest

Interest. How simple and compound interest are calculated Simple interest calculation I = PRT (Interest = Principal x Rate x Time) Dollar Amount x Interest.

Thinking Mathematically

6-7 Change each percent to a decimal. 1.4% 2.9%3.2.0% 4.6.5% % % COURSE 2 LESSON 9-7 (For help, go to Lessons 6-2.) Simple and Compound Interest.

3-5 COMPOUND INTEREST FORMULA

September 9 & 10, Objectives  Determine how interest is compounded for savings accounts.  Explain the various electronic banking methods.  Identify.

4-3 LOAN CALCULATIONS AND REGRESSION

Types of Compound Interest Compound Annually= Once per year Compound Semi-annually= 2 times per year Compound Quarterly= 4 times per year Compound Monthly=

© 2010 Pearson Prentice Hall. All rights reserved. CHAPTER 8 Consumer Mathematics and Financial Management.

Financial Algebra © Cengage/South-Western Slide FUTURE VALUE OF INVESTMENTS Calculate the future value of a periodic deposit investment. Graph the.

5-6 HISTORICAL AND EXPONENTIAL DEPRECIATION

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide THE PROFIT EQUATION Determine a profit equation given the expense and revenue.

– 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.

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide RECONCILE A BANK STATEMENT Reconcile a checking account with a bank statement.

Compound Interest Formula

Simple Interest. Simple Interest – * the amount of money you must pay back for borrowing money from a bank or on a credit card or * the amount of money.

Simple Interest Formula I = PRT. I = interest earned (amount of money the bank pays you) P = Principle amount invested or borrowed. R = Interest Rate.

Simple Interest 6.7. Simple Interest The money earned on a savings account or an investment. It can also be money you par for borrowing money.

Simple and Compound Interest Video: Simple/ Compound InterestSimple/ Compound Interest Video: A Penny a DayA Penny a Day.

You deposit $950 into an account that earns 4 % interest compounded annually. Find the balance in the account after five years. In your last calculation,

3 BANKING SERVICES 3-4 Explore Compound Interest

Financial Algebra © Cengage Learning/South-Western Warm-UpWarm-Up Grab a paper from the back AND pull out Friday’s notes Manny invests $40,000 in a one.

Find the amount after 7 years if $100 is invested at an interest rate of 13% per year if it is a. compounded annually b. compounded quarterly.

Section 6.7 Financial Models. OBJECTIVE 1 A credit union pays interest of 4% per annum compounded quarterly on a certain savings plan. If $2000 is.

Compound Interest Formula. Compound interest arises when interest is added to the principal, so that, from that moment on, the interest that has been.

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide COMPOUND INTEREST FORMULA Become familiar with the derivation of the compound.

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide SAVINGS ACCOUNTS Learn the basic vocabulary of savings accounts. Compute simple.

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide PRESENT VALUE OF INVESTMENTS Calculate the present value of a single deposit.

Graph exponential growth functions. Note: (0,1)

Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide FUTURE VALUE OF INVESTMENTS Calculate the future value of a periodic deposit.

6.6 Compound Interest. If a principal of P dollars is borrowed for a period of t years at a per annum interest rate r, expressed in decimals, the interest.

Aim: Money Matters-Annuities & Sinking Funds Course: Math Literacy Aim: How does money matter? Annuities – a savings plan. Do Now: You are 21 years old.

Future Value of Investments

Financial Algebra © Cengage/South-Western Slide 1 BANKING SERVICES 3-1Checking Accounts 3-2Reconcile a Bank Statement 3-3Savings Accounts 3-4Explore Compound.

Interest Applications - To solve problems involving interest.

CHAPTER 8 Personal Finance.

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

3 BANKING SERVICES 3-1 Checking Accounts

Simple Interest 6.7.

3-8 PRESENT VALUE OF INVESTMENTS

Lesson 7.7 Simple and Compound Interest

FUTURE VALUE OF INVESTMENTS

Savings and Interest Lesson 4.4.

Simple and Compound Interest

Savings and Interest Skill 11.

2-7 Future Value of Investments

Simple Interest 6.7.

WARMUP John deposits $3,300 in an account paying 6% interest, compounded daily. What is the balance in 2 years? a) Daniella deposits $4,000 in an account.

Future Value of Investments

Presentation transcript:

3-7 FUTURE VALUE OF INVESTMENTS Banking 4/6/2017 3-7 FUTURE VALUE OF INVESTMENTS OBJECTIVES Calculate the future value of a periodic deposit investment. Graph the future value function. Interpret the graph of the future value function. Chapter 1

Key Terms future value of a single deposit investment periodic investment biweekly future value of a periodic deposit investment

Future value of a periodic deposit investment B = balance at end of investment period P = periodic deposit amount r = annual interest rate expressed as decimal n = number of times interest is compounded annually t = length of investment in years

Example 1 Rich and Laura are both 45 years old. They open an account at the Rhinebeck Savings Bank with the hope that it will gain enough interest by their retirement at the age of 65. They deposit $5,000 each year into an account that pays 4.5% interest, compounded annually. What is the account balance when Rich and Laura retire?

CHECK YOUR UNDERSTANDING How much more would Rich and Laura have in their account if they decide to hold off retirement for an extra year?

How much interest will Rich and Laura earn over the 20-year period? Example 2 How much interest will Rich and Laura earn over the 20-year period?

EXAMPLE 3 Linda and Rob open an online savings account that has a 3.6% annual interest rate, compounded monthly. If they deposit $1,200 every month, how much will be in the account after 10 years?

CHECK YOUR UNDERSTANDING Would opening an account at a higher interest rate for fewer years have assured Linda and Rob at least the same final balance?

EXAMPLE 4 Construct a graph of the future value function that represents Linda and Rob’s account for each month. Use the graph to approximate the balance after 5 years.