1. Compound Interest

2. Problem 1:
If $150 invested at 15% per year, and the interest due at the end of each interest period is added to the principal, and the interest for the next interest period is calculated on the new principal, what is the amount at the end of four years?

3. $150.00 (Original principal)
Principal at start
$ (Original principal)
Interest on $ at 15% for one year
150 x 0.15 x 1 = 22.50
Amount at end of first year =
Interest on ______ for one year
x .15 = 25.88
Amount at end of second year =
x .15 = 29.76
Amount at end of third year =
x .15 = 34.22
Amount at end of fourth year =
172.50
198.38
228.14

4. Problem 2:
If $2 000 is invested at 7% per year, and the interest due at the end of each interest period is added to the principal, and the interest for the next interest period is calculated on the new principal, what is the amount at the end of three years?

5. Compound Interest Principal + Interest (Pxr) 0.07 = Total 1) 2 000 140
2 140 2)
149.80 3)
160.29

6. Simple Interest
Simple Interest = Prt = x 0.07 x 3 = 420 Total = = 2 420