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Bell Ringer Suppose Shawn deposited $2,500 in a savings account which earns 3.5% interest and is compounded monthly. Find the amount he has after six.

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Presentation on theme: "Bell Ringer Suppose Shawn deposited $2,500 in a savings account which earns 3.5% interest and is compounded monthly. Find the amount he has after six."β€” Presentation transcript:

1 Bell Ringer Suppose Shawn deposited $2,500 in a savings account which earns 3.5% interest and is compounded monthly. Find the amount he has after six years.

2 Interest Tables & Annuities
Skill 12

3 Compound Interest Tables

4 To solve compound interest we can use tables.
Step 1; Total Interest Periods Periods per year * # of years Step 2; Find Interest rate per periods π΄π‘›π‘›π‘’π‘Žπ‘™ π‘…π‘Žπ‘‘π‘’ π‘π‘’π‘šπ‘π‘’π‘Ÿ π‘œπ‘“ π‘ƒπ‘’π‘Ÿπ‘–π‘œπ‘‘π‘  Step 3; Find amount of interest using table Compound Interest-Amount of $1 Step 4; Find amount π‘‚π‘Ÿπ‘–π‘”π‘–π‘›π‘Žπ‘™ π‘π‘Ÿπ‘–π‘›π‘π‘–π‘π‘Žπ‘™βˆ—π΄π‘šπ‘œπ‘’π‘›π‘‘ π‘œπ‘“ $1.00

5 Suppose Arbor Bank pays 18% interest compounded monthly on regular savings accounts. Hank deposited $3000 for 3 years. How much interest was earned after 3 years.

6 Suppose Great Western Bank pays 12% interest annually and on regular savings accounts they compound quarterly. Janet deposited $42,500 for 2 years. Find the interest that was earned.

7 Suppose Wells Fargo Bank pays 18% interest annually and on regular savings accounts they compound monthly. Dave deposited $21,000 for 4 years. Find the amount he has in the account after that time.

8 Annuities 4.5b

9 When an equal amount of money is deposited at equal time intervals it is called annuity.
Ordinary Annuity is when equal deposits are made at the end of the interest period. Annuity Due is when regular deposits are made at the beginning of the interest period.

10 Using annuity to find future value…
For Ordinary Annuity πΉπ‘’π‘‘π‘’π‘Ÿπ‘’ π‘‰π‘Žπ‘™π‘’π‘’=π΄π‘šπ‘œπ‘’π‘›π‘‘ π‘œπ‘“ π‘‘π‘’π‘π‘œπ‘ π‘–π‘‘ βˆ—π‘“π‘’π‘‘π‘’π‘Ÿπ‘’ π‘£π‘Žπ‘™π‘’π‘’ π‘œπ‘“ $1 For Annuity Due πΉπ‘’π‘‘π‘’π‘Ÿπ‘’ π‘‰π‘Žπ‘™π‘’π‘’=πΉπ‘’π‘‘π‘’π‘Ÿπ‘’ π‘£π‘Žπ‘™π‘’π‘’ π‘œπ‘“ π‘œπ‘Ÿπ‘‘π‘–π‘›π‘Žπ‘Ÿπ‘¦ π‘Žπ‘›π‘›π‘’π‘–π‘‘π‘¦βˆ—$1 +π‘Ÿπ‘Žπ‘‘π‘’ π‘π‘’π‘Ÿ π‘π‘’π‘Ÿπ‘–π‘œπ‘‘

11 Mike deposits $750 in an ordinary annuity at the end of each quarter in an account earning 6% interest compounded quarterly. Find the future value of the account in 2 years.

12 Steps of annuity due… Find future value of ordinary annuity
Find rate per period then add 1 Step 3 Multiply the numbers in step 1 and step 2

13 Dakota deposits $900 in an annuity due account at the beginning of each quarter in an account earning 6% interest compounded quarterly. Find the future value of the account in 2 years.

14 Skill 12: Interest Tables & Annuities
Questions? Summarize your notes Homework Worksheet

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