COMPOUND INTEREST Objective: You will be able to apply the formula for compound interest to a given problem or word problem.

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COMPOUND INTEREST Objective: You will be able to apply the formula for compound interest to a given problem or word problem.

A million now or a penny today? DayMoney 1$0.01 2$0.02 3$0.04 4$0.08 5$0.16 6$0.32 7$0.64 8$1.28 9$ $ $ $ $ $ $ $ $ $1, $2, $5, $10, $20, $41, $83, $167, $335, $671, $1,342, $2,684, $5,368,709.12

COMPOUND INTEREST FORMULA amount at the end Principal (amount at start) annual interest rate (as a decimal) time (in years) number of times per year that interest in compounded

Compound Interest PeriodInterest Credited Times Credited per year Rate per compounding period Annualyear1 R Semiannual6 months2 Quarterlyquarter4 Monthlymonth12 Dailyday365

Example 32, (3) Suppose you invest $32,000 into a certificate of deposit that has an annual interest rate of 5.2% compounded annually for 3 years

(2) Find the amount that results from $500 invested at 8% compounded quarterly after a period of 2 years.

COMPOUND INTEREST FORMULA

Compound Interest PeriodInterest Credited Times Credited per year Rate per compounding period Annual Semiannual Quarterly Monthly Daily