1. ©G Dear 2009 – Not to be sold/Free to use
General Mathematics
Preliminary
Investing
Money
Compound Interest
Stage 6 - Year 11
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©G Dear 2009 – Not to be sold/Free to use

2. What is the future value of $10 000 at 10% p.a. for 3 years?
Compound Interest (1/4)
What is the future value of $ at 10% p.a. for 3 years?
Principal Year 1 = $10 000
Initial
Interest Year 1 = 0.10 x $10 000
= $1 000
Principal Year 2 = $10 000
+ $1 000
= $11 000
Interest Year 2 = 0.10 x $11 000
= $1 100
Principal Year 3 = $11 000
+ $1 100
= $12 100
Interest Year 3 = 0.10 x $12 100
= $1 210
Future Value = $12 100
+ $1 210
= $13 310

3. Compound Interest Formula (2/4)
What is the future value of $ at 10% p.a. for 3 years?
P = $
n = 3 years
r = 0.10
A = P(1 + r)n
= ( )3
= x 1.103
= $13 310

4. Futurama Episode – April 27th 1999
Compound Interest (3/4)
Futurama Episode – April 27th 1999
A Fishful of Dollars (S1/E6)
Fry remembers he had a bank account back in the twentieth century. Surprisingly his old bank
Video Clip
account is still active, and has been accruing interest for the past thousand years, bringing the balance from 93 cents to $4.3 billion.
Was the interest really $4.3 billion?

5. Compound Interest (4/4)
Futurama Episode – April 27th 1999
A Fishful of Dollars (S1/E6)
P = $ 0.93
n = years
r = 2.25%
Video Clip
A = P(1 + r)n
= 0.93( )1000
= 0.93 x
= $
= $4 .3 Billion