1. Objectives: Determine the Future Value of a Lump Sum of Money Determine the Present Value of a Lump Sum of Money Determine the Time required to Double or Triple a Lump Sum of Money

2.  Compound Interest: interest computed on your original investment as well as on any accumulated interest  Principle: a sum of money is invested at an annual percentage rate, in decimal form, compounded once per year  Amount of the balance: the accumulated value is determined when the interest is added to the principle at year’s end  n compounding periods per year: most savings institutions have plans in which interest is paid more than once a year or times a year  Time: time periods in years  Compounded continuously:

3.  1.$100 invested at 4% compounded quarterly after a period of 2 years  2.$100 invested at 10% compounded continuously after a period of years

4.  3.You decide to invest $8000 for 6 years and you have a choice between two accounts. The first pays 7% per year, compounded monthly. The second pays 6.85% per year, compounded continuously. Which is the better investment?

5.  4.To get $100 after 2 years at 6% compounded monthly  5.What rate of interest compounded annually is required to double an investment in 3 years?

6.  6.How long does it take for an investment to double in value if it is invested at 8% per annum compounded monthly? Compounded continuously?

7.  EX: Find the effective rate of interest for compounded quarterly