What is Interest? Discuss with a partner for 2 minutes!

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Presentation transcript:

What is Interest? Discuss with a partner for 2 minutes!

What is Interest?  It pays to save money (investments) The bank uses your money and pays you for that use – the bank pays you interest  It costs to borrow money (loans) You pay for the use of borrowed money – you pay interest  The interest is usually a percentage of the sum invested or borrowed called the interest rate (ex. 5% per annum or p.a.)  It pays to save money (investments) The bank uses your money and pays you for that use – the bank pays you interest  It costs to borrow money (loans) You pay for the use of borrowed money – you pay interest  The interest is usually a percentage of the sum invested or borrowed called the interest rate (ex. 5% per annum or p.a.)

Simple Interest  Interest calculated on principal amount ONLY – remains the same every year: There are 2 ways to calculate Simple Interest..  Interest calculated on principal amount ONLY – remains the same every year: There are 2 ways to calculate Simple Interest..

Simple Interest Simple Interest Sally deposits €600 into an account with a rate of 5% per annum simple interest. Calculate the interest Sally receives in 5 years. Method 1Method 2

Simple Interest Worksheet Simple Interest Worksheet Simple Interest Worksheet Simple Interest Worksheet