1. “Interest rate formulas”
2/10/14
“Interest rate formulas”
For each form of interest below, what is the formula and what do the variables mean?
simple interest
compound interest
On desk: Compound interest problems

2. Simple Interest formula I = Prt I = interest earned/paid
P = principal amount
r = rate of interest (% to decimal)
t = time (years)

3. Compound Interest formula A = P(1 + r)t
A = total amount of $$ earned/paid
P = principal amount
r = rate of interest (% to decimal)
t = time (years)

4. 2/10/14
Econ. Agenda
Go over compound interest HW problems
Compound vs. simple interest – How much of a difference is there?
HW:
Compound vs. Simple Interest Rates wksht due Wed. (A) &Thurs. (C)
Financial Literacy Quest #1 tomorrow (open notebook)

5. $ 1,711.85
$ 8,458.11 $ $ $ $
$ 12,388.25
$ 1,217.01
$ 1,473.01
$ 5,162,353.38
$ 7,579.33
$ 4,111.45

6. 2/10/14 Class Notes APY vs. APR Annual Percentage Yield Banks pay you
Simple interest
Simple interest makes $$ grow
Annual Percentage Rate
YOU owe the Bank
Compound Interest
Compound Interest makes $$ grow faster

7. Compound vs Simple Interest Chart
How much of a difference is there between simple and compound interest?
You research…
College loans
Savings accounts
…to find out!