1. INTEREST RATE FORMULAS
The following slides are examples of problems that use different Interest Rate Formulas

3. EXAMPLE 1 P = $20 r = 7.99%= .0799 T = 2 years n = Daily = 365
Use the Order of Operations to simplify
A = 20( /365)365(2) Plugged-in the values
A = 20( )365(2) Simplify the Parenthesis
A = 20( )365(2) Simplify the Parenthesis
A = 20( ) Simplify the Exponents
A = 20( ) Multiply
A = $ Final amount to two decimal places
EXAMPLE 1

4. P = $50
R = 14.99%=.1499
T = 4 years
N = Daily VS
N = Yearly
EXAMPLE 2

5. P = $500
R = 10% =.10
T = 4 years
N = Weekly
Try on your own

7. In Nature: Something that is growing instantaneously (every instant), like snowball rolling downhill, temperature, radioactive decay.
Continuous

8. P = $1, R = 100%, T = 1 Year Using A = P(1 + r/n)nt ‘n’ value Final Amount Annually (1) $2 Monthly (12) $ Daily (365) $ Hourly (8760) $ Minutely (525600) $ Secondly ( ) $
‘e’ = Euler’s number

9. EXAMPLE 3 P = $20 r = 7.99%= .0799 T = 2 years e = 2.718281828…
Use the Order of Operations to simplify
A = 20(e).0799(2) Plugged-in the values
A = 20(e)(.1598) Simplify the Parenthesis
A = 20( ) Simplify the Exponents
A = Multiply
A = $ Final amount to two decimal places
EXAMPLE 3

10. P = $1000
e =
R = 25% =.25
T = 4 years
Try on your own

11. You invest $2000 in a bank account that has a 5% annual interest rate, compounded continuously. How much will you have in 5 years?
Try one more