Simple Interest / Compound Calculating Percentages Int 2 Compound Interest Appreciation / Depreciation Inflation / Working back

Starter Int 2

Calculating Percentages Just Calculating Percentages Simple Interest Compoun d Interest Appreciatio n More Depreciatio n Less Inflation Rising Prices Working backwards

Learning Intention Success Criteria 1.To know the meaning of the term simple interest. 1.To understand the term simple interest and compound interest. 2.To know the meaning of the term compound interest. Int 2 Calculating Percentages 3.Know the difference between simple and compound interest.

Just working out percentages Int 2 Calculating Percentages Simple Interest I have £400 in the Bank. At the end of each year I receive 7% of £400 in interest. How much interest do I receive after 3 years. How much do I now have?

Now try Exercise 1 Ch2 (page 8) Odd Numbers Int 2 Calculating Percentages

Int 2 Calculating Percentages Compound Interest Interest calculated on new value every year Real life Interest is not a fixed quantity year after year. One year’s interest becomes part of the next year’s amount. Each year’s interest is calculated on the amount at the start of the year. Example Daniel has £400 in the bank. He leaves it in the bank for 3 years. The interest is 7% each year. Calculate the compound interest and the amount he has in the bank after 3 years. Principal value

Interest calculated on new value every year Int 2 Calculating Percentages Compound Interest Daniel has £400 in the bank. He leaves it in the bank for 3 years. The interest is 7% each year. Calculate the compound interest and the amount he has in the bank after 3 years. Year 1 :Interest = 7% of £400 = £28Amount = £400 + £28 = £428 Year 2 :Interest = 7% of £428 = £29.96 Amount = £428 + £29.96 = £ Year 3 :Interest = 7% of £ = £32.06 Amount = £ £32.06 = £ Compound interest is £ £400 = £90.02

Now try Exercise 2 Ch2 (page 9 & 10) Int 2 Calculating Percentages

Starter Int 2

Learning Intention Success Criteria 1.To calculate compound interest using calculator.. 1.To understand how to use the calculator to calculate compound interest easier. 2.Show appropriate working when solving problems. Int 2 Calculating Percentages

This is called the multiplier. Int 2 Calculating Percentages Using calculator Using calculator to calculate Compound Calculate the compound interest on £400 over 3 years if interest rate is 7%. Year 1 :Total = 107% of £400 = 1.07 x £400 Year 2 :it is worth 107% of (1.07 x £400) = 1.07 x 1.07 x £400 = (1.07) 2 x £400 Year 3 :it is worth 107% of ( ) x £400 = 1.07 x 1.07 x 1.07 x £400 = (1.07) 3 x £400 = £490.02

Starter Int 2

Learning Intention Success Criteria 1.To know the terms appreciation and depreciation. 1.To understand the terms appreciation and depreciation. 2.Show appropriate working when solving problems containing appreciation and depreciation. Int 2 Calculating Percentages

Int 2 Calculating Percentages Appreciation / Depreciation Appreciation : Going up in value e.g. House value Depreciation : Going down in value e.g. car value

Average house prices in Ayr have appreciated by 79% over the past 10 years. If you bought a house for £64995 ten years ago, how much would the house be worth now ? Appreciation = 79% x £ = 0.79 x £64995 = £ New value = Old Value + Appreciation = £ £ = £ Just working out percentages

A Mini Cooper cost £ in 2002 At the end 2003 it depreciated by 23% At the end 2004 it will depreciate by a further 16% What will the mini cooper worth at end 2004? End 2003 Depreciation = 23% x £14625 = 0.23 x £14625 = £ New value = Old value - Depreciation = £ £ = £ Int 2 Calculating Percentages

Int 2 Calculating Percentages End 2003 Depreciation = 23% x £14625 = 0.23 x £14625 = £ New value= Old value - Depreciation New value= Old value - Depreciation = £ £ = £ End 2004 Depreciation = 16% x £ = 0.16 x £ = £ New Value = £ £ = £ = £

Now try MIA Ex 4 Ch2 (page 12) Odd Numbers Int 2 Calculating Percentages

Starter Int 2 6cm 5cm

Learning Intention Success Criteria 1.Know the term inflation. 1.Understand term inflation and work out associated real-life problems. 2.Work out real-life problems involving inflation. Int 2 Calculating Percentages

Int 2 Calculating Percentages Inflation Measure of how much prices rise each year. Inflation is normally given in percentage form and is normally in the range 0 – 10% Example 1 In 2009 a worker received a wage of £300 per week. If inflation is 2% in 2009, what should be his wage be in inflation = 2% 2% of £300 = £6 His wage should be £300 + £6 = £306

Int 2 Calculating Percentages Inflation Measure of how much prices rise each year. Inflation is normally given in percentage form and is normally in the range 0 – 10% Example 2 In 2002 a CD cost £8. The cost increases in line with inflation. What is the price in 2003 if inflation is 1.5% inflation = 1.5% 1.5% of £8 = £0.12 Price is £8 + £0.12 = £8.12

Now try MIA Ex 6 Ch2 (page 15) Int 2 Calculating Percentages

Int 2 Calculating Percentages Example 1 After a 10% increase the price of a house is £ What was the price before the increase. Reversing the change Price before is 100% :£800 x 100 = £ % : 100 % + 10 % = £88 000Deduce from question : 110 % = £88 000We have :

Int 2 Calculating Percentages Example 2 The value of a car depreciated by 15%. It is now valued at £2550. What was it’s original price. Reversing the change Price before is 100% :£30 x 100 = £ % : 100 % - 15 % = 85%Deduce from question : 85 % = £2 550We have :

Now try MIA Ex 7 Ch2 (page 17) Int 2 Calculating Percentages