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Investment and Compound interest
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a) If Tanisha has $ 100 to invest
at 8% per annum compounded monthly, how long will it be before she has 150? b) If the compounding is continuous, how long will it be?
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INVEST : In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. COMPOUNDING : The ability of an asset to generate earnings that are then reinvested and generate their own earnings CONTINUOUS COMPOUNDING : the process of earning interest on top of interest. The interest is earned constantly, and immediately begins earning interest on itself
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NOTE 100 dollars to invest At a rate of 8%
100 at 8% = st month 108 X 0.08 = = total on 2nd month How long before she has 150?
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FORMULAS TO USE When the interest is compounded n times a year:
A = P ( 1 + r/n )nt Continuous Compounding: A = Pert P = principal (initial amount you borrow or invest) r = annual interest rate (given in percentage use it as a decimal) t = number of years A = amount accumulated after time t
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