1. Math Studies Week 11 I. Kania

2. Bell ringer If you have a bank account whose principal = $1000, and your bank compounds the interest once a year at an interest rate of 5%, how much money do you have in your account at the year's end?principal interestan interest rate

3. Objective Students will calculate compound interest with at least 80 % accuracy.

4. Formula

5. Example If you start a bank account with $10,000 and your bank compounds the interest quarterly at an interest rate of 8%, how much money do you have at the year's end ? (assume that you do not add or withdraw any money from the account)interest rate

6. Example Find the interest rate given to a certain person in case he made a deposit of $1000 and obtain $1200 after 3 years, compounded monthly.

7. Practice You win the lottery and get $1,000,000. You decide that you want to invest all of the money in a savings account. However, your bank has two different plans. In 5 years from now, which plan will provide you with more money Plan 1:The bank gives you a 6% interest rate and compounds the interest each month. Plan 2:The bank gives you a 12% interest rate and compounds the interest every 2 months.

8. More practice Work in pairs. Keep your voice low. Raise your hand if you need help.

9. Summary What is compound interest? How many times interest can be compounded?